Dairy industry in dire straits

DESPITE several warnings from the Dairy Producers Association of Namibia (DPAN) that the industry is facing total collapse due to cheaper South African imports, tax exemption on products could be the only solution.

The Chairman of the DPAN, Japie Engelbrecht, told Nampa on Monday that in order to address this threat, his association is negotiating with the Ministry of Finance not to add value-added tax (VAT) to local cheese and milk products. “We believe that if VAT on fresh milk is not added to the price, products will be more affordable to consumers,” he explained.Engelbrecht expressed concerned that if large-scale imports of milk and cheese continue this year, nothing will change in the industry.The flooding of the market with imports is forcing the local dairy, Namibia Dairies, to offer lower prices to retailers to stay competitive with the imported products from South Africa, according to Engelbrecht.Namibia has been overwhelmed by processed milk products from South Africa since June 2004, which in turn caused the demand for local cheese and long-life milk to decline dramatically.The majority of dairy farms is situated in the Khomas, Omaheke, Otjozondjupa and Hardap regions and produce an average of 1,7 million litres of milk per month.Currently, the association exports dairy products to Angola and Botswana.Another concern raised by Engelbrecht is the labour force in the industry, which faces potential retrenchments if the situation is not remedied.The industry has created about 290 jobs in the primary sector and a further 450 on a full-time basis in the processing plants.The DPAN launched an in-depth study to determine the strategic importance of the dairy industry in the country last year.In February 2000, Namibia Dairies began supplying the local market with Namibian-made ultra-heat treated (UHT) milk and other dairy products like Gouda and Cheddar cheese and yoghurt.This processing is important as it ensures the absorption of the local production, thereby stabilising the industry.The only protection the dairy industry ever received was the infant industry status for the production of UHT milk.This status will benefit the industry until the year 2008.Within the Southern African Customs Union (Sacu), only Namibian and South African dairy industries operate on a deregulated basis.Over time, this has led to a definite disadvantage for the Namibian dairy sector.DPAN has a membership of about 16 farmers countrywide.- Nampa”We believe that if VAT on fresh milk is not added to the price, products will be more affordable to consumers,” he explained.Engelbrecht expressed concerned that if large-scale imports of milk and cheese continue this year, nothing will change in the industry.The flooding of the market with imports is forcing the local dairy, Namibia Dairies, to offer lower prices to retailers to stay competitive with the imported products from South Africa, according to Engelbrecht.Namibia has been overwhelmed by processed milk products from South Africa since June 2004, which in turn caused the demand for local cheese and long-life milk to decline dramatically.The majority of dairy farms is situated in the Khomas, Omaheke, Otjozondjupa and Hardap regions and produce an average of 1,7 million litres of milk per month.Currently, the association exports dairy products to Angola and Botswana.Another concern raised by Engelbrecht is the labour force in the industry, which faces potential retrenchments if the situation is not remedied.The industry has created about 290 jobs in the primary sector and a further 450 on a full-time basis in the processing plants.The DPAN launched an in-depth study to determine the strategic importance of the dairy industry in the country last year.In February 2000, Namibia Dairies began supplying the local market with Namibian-made ultra-heat treated (UHT) milk and other dairy products like Gouda and Cheddar cheese and yoghurt.This processing is important as it ensures the absorption of the local production, thereby stabilising the industry.The only protection the dairy industry ever received was the infant industry status for the production of UHT milk.This status will benefit the industry until the year 2008.Within the Southern African Customs Union (Sacu), only Namibian and South African dairy industries operate on a deregulated basis.Over time, this has led to a definite disadvantage for the Namibian dairy sector.DPAN has a membership of about 16 farmers countrywide.- Nampa