Following the recent realization that the dairy industry of Namibia is rapidly approaching a situation which might cause the industry to collapse, the Dairy Producers Association initiated negotiations with the Ministry of Agriculture, Directorate of Planning and the Ministry of Trade and Industry to establish ways to avert this pending threat.

Although no immediate measures were considered to address the immediate threats, it was unanimously decided to launch an in depth study to determine the strategic importance of the dairy industry in Namibia.

Dairy farming is currently practiced only to a limited extent in the more fertile areas of Namibia. There are 21 milk producers in the areas around Windhoek, Gobabis, Grootfontein and Mariental. Herd sizes ranges from 50 to 650 cattle. In the primary sector about 290 work opportunities have been created, whereas in the processing sector about 450 full time workers are employed.

On average 1,7 mil. liters of milk a month is produced. Fresh milk is therefore 100% locally provided. In the past UHT milk consumed was imported. As from February 2000 the local dairy processor, Namibia Dairies, began supplying the local market with Namibian- made UHT milk. Other dairy products like gouda and cheddar cheese, yoghurts etc. are also locally produced. This processing is important as it ensures the absorption of the local production, thereby stabilizing the industry.

The only protection the dairy industry ever received was the infant industry status for the production of UHT milk. This status will benefit the industry until the year 2008.

Increased dairy imports and its consequences:

A document was prepared and presented to MAWRD and MTI by Mr. J. Hoffmann, Trade Advisor of the Agricultural Trade Forum which explained several aspects of the imports of dairy products and its consequences as follows:

Within SACU only the Namibian and South African dairy industries operate on a deregulated basis. Over time, this has led to the definite disadvantage of the Namibian dairy sector. Namibia, from the middle of last year, has been swamped by processed milk products from South Africa, often at predatory prices that caused the demand for Namibian processed milk (hard cheeses) and UHT (long life) milk to drastically reduce as did the demand for the fresh product. This has made the situation for the primary milk producers very difficult and has resulted in financial losses for producers.

Cows are no factories, where output can be managed to suit changing market conditions. Infrastructure (of a very high standard) work places and other inputs have to be maintained. Loans have to be served, whether the income from an oversupplied market is diminishing or not. Affirmative Action Farmers wish to develop dairy farms in the hope to get access to the milk market. Market access for primary producers is regulated by a quota system, with penalties for oversupply. New applications for quotas, even from formerly disadvantaged farmers, cannot be considered by the Milk Producers Association, because of an oversupplied milk market.

In lieu of the above, Namibia Dairies has been forced to rationalise to ensure financial survival and future profitability and therefore consider termination of operations at the Rietfontein processing plant. The primary dairy industry can ill afford such a move as this might have far reaching effects on employment, social implications for employer as well as employee, the regions economic sustainability and growth as well as the dairy industry in its totality. In fact, the envisaged self-sufficiency of foodstuffs is under threat.

The Dairy Producers Association commits itself to do everything possible within its power to ensure stability and growth in the dairy industry. It is their endeavour to firstly work towards the regulating of the import of dairy products from outside Namibia. Other important objectives are an effective marketing strategy for quality and affordable products manufactured from locally produced milk and decentralization of milk production. Furthermore, the fairness of adding VAT on an essential, highly nutritious, basic foodstuff like fresh milk is questioned and has already been addressed.

With the completed study available the Dairy Industry and its partners will be in a position to make strategic decisions to come to a sensible conclusion.

P. Mutschler

Chairman: Dairy Producers Association of Namibia