WINDHOEK – Cabinet has finally approved the long-awaited bill to regulate the importation and export of milk and other dairy products.
There has been fear among dairy producers that if the bill to regulate the importation and export of dairy products is not given the green light it could spell disaster for Namibia’s small dairy producers.
The country’s 16 dairy producers and the entire dairy industry are in dire straits.
But dairy producers can now breathe a sigh of relief after cabinet approved the bill, paving the way for it to be tabled soon in the National Assembly.
Deputy Minister of Information and Communication Technology Engel Nawatiseb, who announced the cabinet resolutions on Thursday, revealed that cabinet approved, in principle, the Control of the Importation and Exportation of Dairy Products Substitution Amendment Bill of 2018.
He said the Ministry of Agriculture, Water and Forestry is now expected to submit the bill to the Cabinet Committee on Legislation for scrutiny, before it is tabled in the National Assembly.
On February 23 a special meeting was held between the management of the Dairy Producers Association and representatives of the processor Nammilk regarding a raw milk price reduction for Namibian producers of 10 cents per litre and a further possible 10 cents reduction by the end of April.
This was the second price reduction in the last seven months for producers, but these price reductions could potentially mean the end of business for some dairy producers. In addition to the price reduction, payments of producers are being deferred on a monthly basis.
Producers have been warned not to increase milk production, as excess milk will most probably not be taken up in the market due to imports. There are currently less than 3,000 commercial dairy cows in Namibia.
This critical situation in the dairy industry can be ascribed to mostly the influx of UHT milk and closely related other dairy products into Namibia. At the time, imported UHT milk was selling on shelves of Namibian retailers for as low as N$10.99 per litre. In reality this milk is cheaper than a litre of water bottled in Namibia selling in the same shop. In addition, the low-cost imported UHT milk found on Namibian shelves is cheaper than the same packs selling on the same day in South Africa.
All role players have called for immediate and serious intervention to prevent the collapse of the industry.
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 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 shops are imported. The Namibian dairy industry teetered 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 Namibia Agricultural Union’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.
High customs tariffs to Angola and Botswana hampered exports to neighbouring countries and prevented market expansion.
Namibia’s only long-life milk production plant, which belongs to the Ohlthaver & List Group, could face closure if the trend continues, resulting in almost 500 job losses.
The Namibian dairy industry did not receive any price increase over the past two years; instead it had to accept a price reduction of 10 cents per litre of raw milk, while production costs for fuel and fodder increased drastically.
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. New Era Reporter
2018-07-23 09:19:25 | 2 years ago