Agriculture minister Calle Schlettwein said the only viable solution to save the local dairy industry from total collapse appears to be restrictions on imported dairy products, this while responding to questions in the National Assembly last week. These restrictions, which would be implemented through the country’s import and legislation, appear to be part of the limited options available to the local industry, which has lost at least 50% in production during the last four years, and where feed costs now account for between 70% and 85% of production costs.
“This would safeguard the support of the local dairy industry, increase production support, value chain development and downstream value-addition. This is the domestic measure that can be imposed,” Schlettwein stated.
The agriculture minister added that relevant ministries and offices will consult on the implications in this proposed measure, and assured the nation and the dairy industry that all due processes will be followed before any implementation of import restrictions. More than a decade ago, government tried to protect the local dairy industry through the Infant Industry Protection (IIP) scheme between 2000 and 2007. However, according to Southern African Customs Union regulations, IIP can only be granted for the protection of smaller economies for a maximum of eight years.
“While this intervention may provide some relief, I call upon the dairy industry to promote efficiency in their business operations to be competitive and innovative in the future to withstand the competition. In the long run, we believe the industry needs to be supported,” the politician added.
Among the short-term measures to rescue the struggling industry, as recommended by a task team assembled to investigate challenges presented by the Dairy Producers Association of Namibia (DPA) and formulate recommendations to rescue the industry, was the introduction of the government subsidy of N$2 per litre of raw milk.
“This could have assisted to cover the utility costs incurred by the producers by stimulating investment by dairy producers to increase production. However, due to limited funding, this proposal could not be implemented. It needed a total amount of about N$40 million,” Schlettwein explained.
The task team, which deliberated on recommendations to rescue the industry, comprises representatives from the DPA, the agriculture ministry, the agricultural union, the agricultural trade forum and Namibia Dairies.
Meanwhile, Schlettwein observed that the ministry is aware of challenges the industry is going through and is considering various options to assist this crucial industry and significant job creator from collapsing.
He said the industry and its subsequent value chain is included in the Harambee Prosperity Plan’s comprehensive agricultural development programme as an important pillar that can contribute to the socio-economic wellbeing of Namibians, enhance household food security and nutrition, and create more employment.
“This sector is very important to the Namibian government, and specifically in the agricultural sector.
“After consultations with the DPA and dairy milk producers last year in October at the Super Farm in Mariental, they elaborated on difficulties faced by the industry such as high production costs, influx of cheap dairy imports, unfavourable exchange rates, regional and global competition and low prices for raw milk, recurring drought and poor economic situations in the country, which were further affected by the pandemic,” said Schlettwein.
Namibia’s raw milk volumes are declining at a staggering rate. Average raw milk volumes between 2015 and 2018 were 24 million litres. In 2019, this dropped to 21 million litres, and in 2020 it fell even more to 17 million litres. The expected milk production estimate for 2021 is 12 million litres, which means the supply of milk to processors is at critically low levels.