Milk imports to be restricted

Chamwe Kaira

CABINET has granted the Ministry of Trade and Industry approval to institute interim quantitative restrictions on imports of fresh, Extended Shelf Life (ESL), Ultra High Temperature (UHT) milk, buttermilk, curdled yoghurt and other fermented milk products.

This will be done through the introduction of an import permit system to be administered by the Meat Board of Namibia, Cabinet announced in a statement.

The Ministry of Trade and Industry, received a submission from the Dairy Producers Association (DPA) of Namibia, which cited serious difficulties that local livestock farmers and dairy producers are facing due to alleged unfair competition from imports mainly from South Africa.

Cabinet said the short term relief being sought by the local dairy is to be instituted in terms of the relevant provisions of the Import and Export Act of 1994. “It is however envisaged that a permanent control measure will be instituted through an amendment to the Meat Industry Act of 1981 and appropriate action is underway in this regard,” the statement said.

The SACU Agreement allows Botswana, Lesotho, Namibia or Swaziland to impose temporal restrictions on goods being imported into the territories for purposes of protecting their budding or infant industries that are threatened by such imports.

In 2000, Namibia used the SACU Agreement to impose an additional tariff of 40% on all milk imports. The protection was extended in 2008 for another four years up to 2011. “Such protection is therefore no longer in existence,” Cabinet said.



Market size



The size of the Namibian market for fresh milk and long life milk combined is estimated at 950 000 litres per month and about 1,6 million litres per month for long life Ultra High Temperature (UHT) processed milk. Monthly raw milk supplies for the local market originate predominantly from a contribution of 1,3 million litres by Namibia Dairies’ !Aimab Super-farm near Mariental and 820 000 litres from the milk delivery quotas of the independent commercial dairy producers.

Namibia Dairies currently has an estimated 50% share of the local commercial dairy product market. Total raw milk production in Namibia significantly increased as from 1992 to 2012.

The Namibia dairy industry says imports are threatening the survival of the local milk producing farmers and dairy producers.

It is alleged that South African producers are aggressively offloading surplus milk products into the Namibian market at very low or discounted prices. Namibia Dairies says it is unable to match the low prices of imported milk at the current cost it has been buying the milk from local producers given the high cost involved in processing milk in Namibia.

The external threat has forced Namibia Dairies to consider reducing milk intake from the local producers or cattle farmers, a step that has or will have a negative effect on the livestock farmers who are also negatively affected by the prevailing drought.



Finding a solution



In an attempt to find a viable solution and avoid a potential closure of milking operations in the country, a series of emergency meetings took place between Namibia Dairies and the Dairy Producers Association (PDA), during which the parties agreed on an interim arrangement whereby the DPA members agreed to a base price reduction of 40 cents per litre of raw milk delivered to Namibia Dairies as from 1 April.

This interim arrangement will be in place for three months. The reduced price of raw milk is negatively affecting local milk producers and has resulted in a loss of income estimated at N$328 000 per month and, if the causal factors are not promptly addressed, will translate into a loss of N$3,9 million per annum, the Cabinet statement said.

The local dairy producers have also cited other factors that are contributing to the inability of the dairy industry in Namibia to effectively complete with the South African dairy industry. These are synthetic hormones that induce milk production, low transport cost through, which supplies of milk ordered from South Africa are subjected to the same transport costs per truck delivery.

In South Africa, milk is VAT exempted whereas in Namibia milk is subjected to a 15% VAT.