Zimbabwe: Import Substitution Drive Pays Dividends

Results from Government's import substitution drive have started manifesting, with dairy imports dropping 21 percent from US$6,6 million in the first quarter of 2023 to US$5,2 million in the comparable period this year.

This comes on the backdrop of a 21 percent surge in milk production from 38 million litres between January and May 2023 to 46 million litres in the comparable period this year.

Statistics from Zimbabwe National Statistics Agency (ZimStats) show that dairy products import declined from US$6 640 041 in the first five month of 2023 to US$5 249 796 the same time this year.

In volume terms dairy products declined 3 percent from 1 608 845 kg to 1 556 495 kg over the same period.

The country imports milk, cream, yoghurt, buttermilk, ice cream, whey, butter and cheese among its basket of milk products.

Dairy Processors Association of Zimbabwe (DPAZ) secretary general, Mrs Tendayi Clementine Marecha, said there was need for locally produced milk to be cheap to contain imports.

"The growth in milk production is much appreciated although it is not enough to meet our processing requirements. Our major challenge is the high cost of local raw milk which is more expensive as compared to imports," said Mrs Marecha.

Among the cost drivers are water, electricity and fuel that tend to make the country's products more expensive.

The country requires about 130 million litres of milk per year to be self-sufficient, with local production hovering around 100 million litres. The shortfall is met through imports.

"We are still importing milk powders to compliment the local raw milk in manufacturing dairy products. We are currently competing with imports, that are a lot cheaper and are in the parallel market implying they are being smuggled in," she added.

Being price sensitive consumers are resorting to imports and we have substantial stocks in our warehouses.

Mrs Marecha said local products are of superior quality and as an industry they were looking for supportive policies that will encourage industry growth through lowering the costs of production.

Establishment of a one-stop shop within Government establishments mandated with import and export permits issuance will boost the easy of doing business concept and substantially lower costs.

In the 2023 budget, Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, introduced a gradual substitution of dairy product imports through increased local production.

He also called on dairy processors to simultaneously increase their uptake of raw milk from 70 million litres to 130 million litres per annum by 2025.

The Government gradually reduced on a sliding scale milk powder imports starting at 75 percent in 2023 to 50 percent in 2024, and then to 25 percent by 2025.

The effects of these fiscal measures are beginning to bear fruit as milk products import dropped 16 percent from US$37 million in 2021 to US$31 million in 2022. It has declined a further 15 percent to US$27 million in 2023.

Statistics released by the Zimbabwe Association of Dairy Farmers (ZADF) show that national dairy herd rose 13,4 percent from 53 250 in 2022 to 60 398 in 2023.

On the other hand, the milking herd in 2023 stood at 39 811.

This literally shows that the industry has surpassed the 2025 target of a total dairy herd of 60 000 and 38 000 milking cows.

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