Windhoek-The price of imported milk and other dairy products like yoghurts is set to increase while milk volumes produced on Namibian farms in 2017 are four percent lower than five years ago.
This, coupled with the unfortunate challenging economic times faced by the world today, which caused immense pressure on disposable income, has resulted in significant revenue cuts in the local industry, seeing a 15 percent decline in fresh milk and UHT in Namibia between July and December last.
Managing director of Namibia Dairies, Gunther Ling, says the absence of rain makes things “no easier” for the Namibian dairy industry.
“It is very likely that consumers will soon pay slightly more for milk and other dairy products during the course of the year. This economic dip makes resources scarce, thus resulting in the upscale of prices and in return increasing the cost of production. This is not just a milk thing. The pressure is on everyone. Maize prices will be affected by the lack of rainfall, and we can also expect an increase in fuel/oil prices going forward,” he laments.
Compared to South Africa’s N$5.20 per litre, Namibia’s producer price of raw milk currently stands at N$6.05 per litre. The pressure on the local dairy industry has increased over the past few years. The market offers a fully open and non-regulated trade in milk and other dairy products. This results in increasing import competition risking the replacement of local dairy production and manufacturing. Almost all butter and cheese sold in Namibian retail shops are imported. The Namibian dairy industry was teetering on the brink of collapse at the end of 2015 and battled through two tough years since then when drought conditions caused large-scale losses of maize harvests in South Africa and resulted in tremendous increases in feeding costs.
Feeding costs remain the biggest factor in the total production costs of dairy producers. According to the NAU’s dairy producers cost index, feeding costs increased by nearly 50 percent in 2015 and total production costs increased by about 28 percent over the same period.
South African competition is still a big risk for the local industry and thus the protection needed by the industry is still being enforced by the authority and the industry, apart from the coupled challenges. Internationally there is still a surplus of milk produced, especially in Europe, which has been using the African market as an outlet. This causes additional competition and increases the pressure on local producers and processors even further. New Era Reporter
2018-02-06 10:10:15 | 2 years ago