• December 1st, 2020

Illegal, undeclared products have local dairy, poultry sectors on their knees

Deon Schlechter

WINDHOEK – Some seven million litres of dairy per annum has entered Namibia undeclared over the last six years, a study has revealed, while another survey concluded that some 2.5 million chickens may have entered the country illegally last year.

These two studies illustrate the dire situation of the dairy and poultry industries, and on top of that, the dairy industry’s Superfarm of the Ohlthaver & List Group now faces being shut down due to the low water levels of the Hardap Dam, which make irrigation of lucerne as fodder for dairy cows virtually impossible.

A Dairy Producers Association (DPA) study by Dataspank in collaboration with the Namibian Trade Forum (NTF) shows that the Namibian dairy industry accounts for only one percent of all dairy products in relation to the South African dairy industry. Namibia’s total annual milk production is 24 million litres, which South African producers produce every three days. Whereas Namibia’s total dairy population is 3 000 cattle some individual milk producers in South Africa have 3 000 cows per stable. Not only does the local industry have to compete with cheap imports from SA, but the study pointed out that some seven million litres of dairy entered the country undeclared over the six years.  The study used the South African figures to demonstrate that it is simply not possible for Namibia to compete against global markets. Nevertheless, the dairy industry in Namibia is seen as a sector of strategic importance for the government in terms of employment, industrialisation and growth. 

According to the Labour Force Survey of the Namibia Statistics Agency (NSA), done by Cirrus Capital, Namibia consumes about 40 000 tonnes of chicken annually but the poultry industry has to bear the brunt of competition in the form of imports from South Africa and Brazil.

Namibia Poultry Industries (NPI) produces the bulk of local chicken at about 25 000 tonnes per annum and creates some 700 jobs. The informal sector produces about 850 tonnes and creates more than 500 jobs.
The NSA figures on chicken imports show that almost 17 000 tonnes of chicken were imported last year. At an average price of N$22 p/kg, this represents N$374 million leaving the country and being paid to countries that export chicken to Namibia.

 The dairy study further shows that with a current population growth of 1.8 percent and with a constant per capita consumption of nine litres of UHT milk per day, there is great potential for growth in the industry.

However, due to imports of UHT milk, this market share of locally produced UHT milk has stagnated, and especially imports have grown. Therefore, imports must be limited to allow the local sector to grow. Role players stressed the importance of supporting the local dairy industry, especially in view of Namibia’s economic growth. It is hoped that the draft legislation that will regulate imports, and which is currently at its final stage, will be tabled in parliament this year to provide the necessary support to the industry. 

Agriculture minister Alpheus !Naruseb has promised a concerned delegation from the dairy industry his personal support for the speedy conclusion of the amendments to the Dairy Act, so that the necessary support can be given to the crippled local dairy industry as soon as possible.   

The country’s 16 dairy producers and the entire dairy industry have been in dire straits for the past few years, facing more than one price reduction in the last two years, which could potentially mean the end of business for some of the dairy producers. 

The market offers a fully open and non-regulated trade in milk and other dairy products and this results in increasing import competition, risking the replacement of local dairy production and manufacturing.
NPI has calculated that the total imports of chicken have cost Namibia more than 500 SME jobs and illegal imports trip up the sector even further. 

Currently, import measures force local producers to compete with the cheapest broiler production from anywhere in the world.

The South African Poultry Association is currently fighting import restrictions in the Namibian High Court. Local producers have indicated that Namibia needs even more protection in a bid to develop the local industry and jobs.

All butter and cheese sold in Namibian shops are imported. Feeding costs have increased by nearly 50 percent since 2016 and total production costs by about 28 percent over the same period. 

Namibia’s only long-life milk production plant could face closure if the trend continues, resulting in almost 500 job losses. Milk prices in South Africa are exempt from value-added tax (VAT) for consumers and Namibia cannot compete against the import of subsidised dairy products. In Namibia, a 15 percent VAT is levied on all milk sold.


Staff Reporter
2019-06-18 11:11:21 | 1 years ago

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