Agricultural policies

Featured items

Discussions on dairy sector safeguard measures in Namibia intensify

August 28, 2013

According to reports in July 2013 in the Namibian press, the dairy sector in Namibia could be on the verge of collapse if protective measures are not introduced. Speaking at a public consultation convened by the Namibian Ministry of Trade and Industry to discuss possible quantitative restrictions on dairy imports under the Import and Export Act, the Dairy Producers Association (DPA) stated that creameries in all major towns have been closed.

A sector review undertaken by the Namibia Trade Forum found that retail shops get the highest margins on dairy products, with farmers receiving a substantially smaller share of the sale price. According to the Manager of Research and Development at the Namibia Agricultural Union, Botswana currently applies an additional duty on milk imports in line with its rights under the SACU Agreement, while from time to time Swaziland has taken similar measures under the infant industry protection provisions of the SACU Agreement.

According to figures provided by the owners of Namibia Dairies, raw milk production costs in 2012 were as low as N$2,46 per litre in Kwazulu Natal, N$2,84 in the Western Cape and N$3,05 in Mpumalanga, while in Namibia the raw milk production cost is N$4,65. In addition, it was maintained that South African companies enjoy a transport subsidy system, as a result of the practice by many retail chains and distributors of [allocating] transport costs on a percentage basis on the value of goods imported. This means that all low-value products with a large weight-to-value ratio attract proportionally lower transportation costs than would normally be the case. This, it was maintained, means that the transport costs of imported milk often do not reflect the real transport cost and the distribution cost to retailers within Namibia, placing the local UHT milk at a distinct disadvantage in the retail trade.

Namibia Dairies representatives gave public assurances at the consultation that if quantitative restrictions were introduced, they would maintain reasonable pricing structures.

The South African company Clover Industries meanwhile argued that import restrictions should be the last option, and warned against establishing a monopoly domestic supplier. Representatives of Clover claimed that the company supplied only 10% of the Namibian market for dairy products, and hence had an insignificant material effect on the market.

In response to submissions, a Namibian government spokesperson pointed out that no import controls were currently in place. While it has been suggested that dairy products be included as controlled products within the scope of the Meat Industry Act, it was argued that this would be a lengthy process requiring parliamentary revision of the Act, and as such would not address the immediate challenge. Nevertheless, an amendment to the Meat industry Act along these lines is being prepared for submission to the Namibian parliament.

At the beginning of August 2013, cabinet approval was granted for interim quantitative restrictions on imports of fresh, Extended Shelf Life (ESL), Ultra High Temperature (UHT) milk, buttermilk, curdled yoghurt and other fermented milk products. This is to be implemented through an import permit system to be administered by the Meat Board of Namibia. The interim measures are to be applied for 3 months.