Tanzania: Milk Output Soars After Steep Increase in Import Fees

Dar es Salaam — Milk producers say they have increased production by up to 47 per cent within the past five months, thanks to a drastic decrease in imports.

Last October, the government introduced new regulations under which milk import fees rose 13-fold in what was seen as a deliberate move to stimulate local processing in a country that has been spending about Sh30 billion each year on imports of dairy products.

Under the Animal Diseases and Animal Products Movement Control Regulation, which became effective late last year, importers have to pay Sh2,000, up from Sh150 that was charged previously.

But speaking yesterday on the sidelines of a dairy sector roundtable meeting organised by NMB Bank in partnership with Global Dairy Platform (GDP), local manufacturers told The Citizen that steep increase in import fees was a blessing to them and that it had resulted in an increase in production while others said they would set up new production facilities in support of the move that goes along with President John Magufuli's industrialisation drive.

Azam Dairy Products, Asas Dairies and Tanga Fresh are some of the local milk processors who said the increase in import duty has had some positive outcomes on their operations.

Asas Dairies supply chain management advisor Abdul Ally said their production increased by 8,000 litres a day in a space of four months since October last year.

"Our production has climbed from 17,000 litres to 25,000 litres, though this is attributable to a multiple factors, in addition to increased fee on imported milk," he said. Tanga Fresh increased production to an average of 46,000 litres a day compared to 35,000 litres last year, according to its general manager Michael Karata.

"Previously, it was hard for our products to compete with imports, whose producers enjoyed economies of scale due to high volume production," said Mr Karata whose factory has an installed capacity of 120,000 litres per day.

Countrywide, production capacity stood at 150,000 litres a day against the installed capacity of 750,000 litres.

Livestock and Fisheries minister Luhaga Mpina said they would make an assessment of the impact of increased fee on imported milk at the end of the 2018/19 financial year.

He said the aim of raising import duty was meant for them (fees) to reflect the economic changes in the country and the region at large.

"We had the same fees since 2009 despite some changes that we are passing through, including fluctuation of the shilling, strengthening of the dollar and regional economic changes," said Mr Mpina.

Azam Dairy Products factory manager Adilson Fagundes said increase in fee triggered them to think of production of raw milk and already they had the location for the milk collection centre as well as the cooling tank for storage.

"This project that would see the company stop importation in future, is going to take not more than a month," said Mr Fagundes.

Production at the 180,000-litre installed capacity factory hoovers around 20,000 litres and 25,000 litres per day.

Due to increased operational costs resulting from the introduction of new charges on imports, Azam remained only in Zanzibar's market, while closing business in Tanzania Mainland.

"We have entered Memorandum of Understanding (MoU) with the government that will see us resuming our sales in the Mainland on March 1," said Mr Fagundes.

He said yesterday the company received MoU that showed that they would pay Sh250 per litre of milk instead of Sh2,000.

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