Wezi Tjaronda
4 August 2008
Windhoek — Increased cost of inputs continues to put pressure on the local dairy industry, so much that farmers may leave the industry if the situation does not improve for the better.
One big dairy producer has already left the industry, while other farmers have slaughtered cows that could still produce milk, according to the Japie Engelbrecht, President of the Dairy Producers Association. Engelbrecht said at the Dairy Producers Association annual general meeting last week, more farmers were likely to leave the industry.
"One farmer may not sound as much but if you are told that seven percent of the producers are leaving with a further 14 percent planning to do the same, this may paint a different picture," said Engelbrecht.
Production in the industry has been stagnant for the past years because of increased input costs. With the increases in transport and fuel costs, Engelbrecht said, farmers could not produce enough milk.
The milk that the producers deliver to Namibia Dairies, the country's only milk processor is 13 percent less than their quota, Engelbrecht said. This has forced the Namibia Dairies to import fresh milk from South Africa, where some farmers have surplus milk.
New Era is informed that Namibia Dairies imports about 2000 litres of milk from South Africa. This, however, could not be independently confirmed because the company's management was in a meeting on Friday.
This situation may not last long because it is believed South Africa may also face a shortage in the near future.
"We believe they will also have a shortage again because of the decrease in producer prices," he said.
Farmers are, however, pinning their hopes on the price increase implemented last month. Producers are now getting N$4.30 per litre. Engelbrecht said this would enable farmers to produce milk aggressively.
Even though times are hard, the industry wants the Government to remove VAT on milk, in the same way as other basic food commodities. The Dairy Producers Association approached the Government two years ago to abolish VAT on milk.
"Unfortunately, milk has not been targeted as one of the products that are free of VAT," he said, adding that the association would continue to ask the Government to remove VAT on fresh, UHT and cultured milk.
Minister of Agriculture, Water and Forestry, John Mutorwa, acknowledged the difficult times the industry has gone through especially because of competition from subsidised imported milk products and high input costs.
Mutorwa said the industry had been one of the agriculture sector's leading components because of products that were exported to neighbouring countries.
But while the increase in imports was challenging, it was important for the industry to be competitive for policy makers to formulate responses.
These could include specific issues related to neighbouring South Africa's external trade relations stipulated in the SACU agreement.
He said the industry is important because of its ability to create jobs, add value to raw products, export earnings and its ability to enable Namibia attain food self sufficiency.
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