Imported milk products continue to put local farmers at a disadvantage, Malawi Milk Producers Association has said.
In its position paper to the Ministry of Finance, Economic Planning and Development for the 2019/20 pre-budget consultation meetings, the association says it wants Treasury to introduce 25 percent duty on all milk powders and milk products and re-invest the proceeds in the local dairy industry to develop the smallholder dairy sector in Malawi.
The association’s president Hebert Chagona said this will help provide a level playing field for the locally produced milk that is in its infancy and does not have similar economies of scale to reduce cost in the region.
“Uncontrolled imports of liquid milk and milk powder reduces the market for locally farmed milk by over 12 000 small-scale farmers, resulting in low revenue for the industry, delayed payment of milk sales to dairy farmers which subsequently lowers farmer’s ability to reinvest in dairy, lowering farmgate prices, oftentimes resulting in damaging quotas,” he said.
Between 2016 and 2017, Zimbabwe imposed 25 percent duty on all milk imports to protect local farmers. It proceeded to exclude all milk imports under the Industrial Rebate Scheme and reinvests the proceeds of taxes on milk to local farmers.
Zambia also has a similar tax regime on milk; however, import permits are only issued when local production is insufficient to meet demand.
Tanzania, on the other hand, has put a ban on all milk imports and introduced a 1 200 percent duty.
Currently, figures from the Malawi Milk Producers Association indicate that the country’s annual milk consumption is at around 51.8 million litres with a market estimated at 57 million litres per annum while milk production stands at 35 million litres per annum.
In Malawi, local production is predominantly liquid milk.
Minister of Finance, Economic Planning and Development Joseph Mwanamvekha said during the third 2019/20 pre-budget consultations in Blantyre that while protecting local industries is key, Malawi is also signatory to other trade agreements in the Southern African Development Community (Sadc) and the Common Market for East and Central Africa (Comesa).
By banning imports of milk products, Mwanamvekha said Malawi would be violating of the trade agreements and can compromise trade.