Thursday
Aug 28th
| Duty on Milk to Encourage Local Production |
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Government’s decision to impose import duty on milk in April this year is expected to boost the local dairy industry; however some farmers believe that this kind of protection
 sometimes makes the local industry inefficient and less competitive. The tax may also affect consumers adversely who are already feeling the pinch of high prices from other food products. The government imposed 20 per cent import duty on Ultra-Heat Temperature (UHT) processed milk that includes brands such as Ultra Mel and Super Milk in April to protect the young dairy industry in Botswana. Other milk types have only been affected by the longstanding 10 per cent Value Added Tax (VAT). The import duty is reported to be a strategy to encourage chain stores in Botswana to buy from local producers such as Delta Diaries and Sunny Side dairy farm near Lobatse. The chairman of the Parliamentary Committee on Agriculture and Environment, Mr. Mephato Reatile, told The Gazette that the decision was taken to encourage more dairy farmers to come into the fold, while at the same encouraging chain stores to buy local produce. Reatile welcomed the development because it conforms to international practice. He gave the example of South Africa where the tax is imposed on imported vehicle is higher than the value of the car itself. He said these kinds of arrangements are meant to protect local producers, especially start up sectors. The protection is usually lifted after eight years when the industry should be well established. According to Reatile more Batswana will be attracted to milk production if they realize that there is a viable market. He pointed out that milk from South Africa is likely to be cheap for local chain stores and this could end up shifting all the attention to South African products. In 2007 Botswana produced only 7.7 million litres of milk and imported 22.5 million litres worth P105 million. Reatile said this was a serious challenge, especially as the dairy industry is faced with limited breeding stocks and feeds, a disjointed market and expensive equipment. “The new arrangement will help encourage people to buy local milk, the return garnered by farmers could help them buy equipment and improve their breeds,” he said. However, he said, high tax levied on South African milk should not make local producers complacent. “They should prove that they are competent and can deliver high quality products,” he said. But a member of the Gantsi Farmers Association (GFA), Mr John John said there should be a time frame for the arrangement. He feared that protection of this sort at times makes local producers inefficient. “They can become inefficient because they know that at the end of the day they are protected through the tax system,” he observed. He said a time frame would inject a note of urgency on farmers activities because they will know that protection is only granted for certain period of time. While he agreed that it is ‘okay’ to protect locals, at times it has to be understood that the world is fast becoming a global village. “There are two sides to every coin, we should also encourage our people to compete with the outside world,” he said, John said there should be a balance between production and consumption. Consumers might suffer because local producers do not satisfy t market needs, or products could become expensive because the chain stores buy at a very high rate. “I strongly feel that there should be a time frame for any kind of protection,” he emphasized. BY AUBREY LUTE |
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