Milk imports crowd out dairy farmers
The influx of cheap powdered milk imports on the local market is pushing out dairy farmers with Malawi Milk Producers Association (MMPA) saying if the trend is left unchecked local producers will be out of business.
MMPA has since accused government of failing to protect the local dairy industry by allowing milk imports when locally the product is available.
The grouping also said the Ministry of Trade left out milk on the list of imported items requiring import licence and import duty when it recently gazetted new Control of Goods Act of 2018 which became operational on July 24 this year.
In a statement Wednesday, MMPA national director Herbert Chagona said a recent study found that in Lilongwe imported milk powder weighing 50 kilogramme (kg) is selling between K70 000 to K80 000.
He said the price is K25 000 cheaper than other milk powders which are available in Malawi from outside of the Common Market for Eastern and Southern Africa (Comesa) or Southern Africa Development Community (Sadc) region.
The analysis further shows that a 50kg bag of the said milk can produce more than 5 000 spoonful of 5 millilitres (mls) and capable of putting out of business not less than 20 local rural Malawian dairy farmers who in total are producing over 112 000 liters of milk in a day.
In that regard, Chagona said dairy farmers expected that the Control of Goods Act would control unfair imports and allow comparative disadvantages to be managed.
“We, therefore, demand the government to consider increasing duty, or introduce excise tax on all milk powders and milk products under Tariff heading 0401 of 25 percent.
“Government should control and regulate milk powder imports into the country to ensure that local production and Malawian small scale farmers have a market for their milk and milk products,” he said.
MMPA is also asking the government to reinvest the proceeds of taxes on imported milk and milk products to local dairy to develop the smallholder dairy sector in Malawi.
However, Minister of Trade Sosten Gwengwe in a written response to MMPA concerns has called upon dairy industry players to make their case to the ministry.
“Import restrictions are not the only way to protect local industry. We always encourage industry to engage the ministry to find solutions to challenges together,” he said.
Agriculture expert Tamani Nkhono-Mvula said the influx of cheap milk will has a potential of kicking out the local farmers from the dairy value chain.
He said Malawi needs to think about how to empower local dairy farmers to reduce their production costs but also to bring competitive products on the market before thinking of imposing taxes on imported milk.
“Currently the local farmers are unable to meet the local demand as most of them have a low production capacity.
“Most of them don’t have the capacity to add value to their milk and are literally at the mercy of the traders and milk being a highly perishable product most of the farmers cannot cope,” said Nkhono.
The Malawi dairy industry is an agriculture subsector supporting over 20 000 small scale rural farmers throughout Malawi.
The livelihood earns over K22.96 million everyday across Malawi and creates local employment of over 12 000 people.
