Dairies scramble for higher output
Local producers lobby government
Chairperson of the Namibian Dairy Producers Association, Japie Engelbrecht this week requested the Ministry of Trade and Industry to increase the volumes of milk imported from South Africa, citing a 15% increase in the demand for milk in recent months.
The current short supply and the escalating price of fresh milk have sparked fears that the local dairy industry is not able to meet local demand. Severe criticism was expressed by consumer lobby groups on Infant Industry Protection measures of dairy products, which prevent mostly cheaper South African exports to reach the local market.
Upon enquiry by the Economist, Dr Malan Lindeque, Permanent Secretary in the Ministry of Trade and Industry said that his ministry is still formulating a response while the Namibia Diary Producers Association which is affiliated to the Namibia Agricultural Union, forwarded all queries to Namibia Dairies.
The list price per litre rose from from N$11.87 to N$13.05 for Ultra-high temperature (UHT) milk while fresh milk has gone up from N$13.76 to N$14.92.
In the case of a shortage, the Ministry of Trade and Industry makes provision for increasing the importation quota beyond the prescribed limit of 500,000 litres per month for milk and cream and 200,000 litres per month for other milk products and derivatives.
Ohlthaver and List Group spokesperson Roux-ché Locke confirmed sporadic out of stock scenarios with cream and ultra-high temperature milk as raw milk supply is under strain citing the previous drought as the overwhelming factor.
Namibia Dairies is investing N$3 million to increase production capacity for milk cultures freeing up production for fresh milk, and Ultra-high temperature packaging. Infant Industry Protection against foreign imports and an increase in production costs at the Mariental based Aimab Superfarm have led to the occasional short supply of fresh milk.
The N$80 million Aimab super dairy farm houses 4000 cows, contributing the majority of the national milk supply and it employs 55 people. Hopes were high of Aimab increasing initial production from 18,000 litres in 2009 per day to 60,000 litres in a three-year period.
The dairy farm was funded by the Agricultural Bank of Namibia and the Development Bank of Namibia.
Electricity and water costs in Mariental have increased by over 10% while raw milk sourced from external farmers and packing material have both increased by 15%. The cost of fodder, worsened by the effects of last year’s drought, increased close to 18%. About 30,000 tons of fodder is required annually by local dairy farmers including Aimab Superfarm.
“Namibia Dairies has employed all possible measures to respond to the current market dynamics and try and meet the needs of our consumers, and as such, we are pleased that there are currently no out of stocks in our portfolio of Namibia Dairies yoghurt and fresh milk,” Locke said. She added that the use of hormones would lower production cost but that would result in EU export bans and harm the red meat industry.” All efforts should be made to minimise input costs such as feed components like yellow maize, and utilities, to name but a few.”
Earlier, Bidvest Namibia Holdings subsidiary, Matador Enterprise had disputed the legality of the dairy restrictions. They claimed that Namibia Dairies would benefit unduly from restrictions and that Matador’s trade and business could be at risk as it relies on importation and distribution of South African dairy products.
The Industrial Development Policy for the common trade policy of the whole of SACU allows for member states to recognise the importance of a balanced industrial development of the Common Customs Area as an important objective for economic development while agreeing to develop common polices and strategies to avoid unfair trade practices.