Drought impacts milk
Following a recent statement issued by the Dairy Producers Association (DPA) as well as the Namibia Trade Forum’s release on the retail price monitoring report on milk, Namibia Dairies subsequently responded with their own statement to explain the discrepancy in the price of UHT milk. Namibia Dairies acting Managing Director, Peter Grüttemeyer said there are a number of factors that increase the cost of dairy in Namibia as opposed to countries like South Africa. The most important cost component is the actual cost of producing raw milk.
Grüttemeyer referred to the statement issued by the DPA that stated that ‘Namibian producers are not allowed to utilize Genetically Modified Organisms (GMOs) in fodder, antibiotics like Rumensin, or growth hormones like rBST, to artificially increase feed conversion ratios resulting in higher milk production volumes. This together with the effects of the drought impacts the price of dairy products in Namibia.’ Grüttemeyer explained that in Namibia the cost of feeding a cow is therefore higher, while the amount of milk produced is lower. “This effect is illustrated if one compares the raw milk production cost in 2012, which was as low as N$2.46 per litre in some parts of South Africa, while the price of producing milk in Namibia during that same period was N$4.65 per litre. Furthermore, transport subsidization, pricing strategies, and oversupply in some markets, have further reduced the cost of imported milk.” Grüttemeyer said increased feed costs as a result of the drought in Namibia have further increased the cost of local milk production. “Also, while all South African produced milk is VAT exempt, VAT is charged on UHT milk produced in Namibia. Therefore, in order to ensure sustainability of this industry, we must level the playing field”, he said.