A dairy farmer Rudolf Burger, from Brandfort in the Free State is upset after he recently discovered a consignment of long-life milk under Woodlands Dairy’s First Choice brand, hailing from Poland at one of SA’s large retailer groups Metro. According to him, South African dairy farmers can supply enough milk to meet local demand. It is totally unnecessary to import long-life milk.
Burger sketches the picture and says that he is certain that Polish dairy farmers are subsidized, South African dairy farmers are in a difficult position due to rising costs such as wages, power and fuel. However, he believes there should be import tariffs on imported milk and other agricultural products because in most cases the consumer is not favoured and the trader is the only one benefiting.
According to Mr. Lex Gutsche, chairman and CEO of Woodlands Dairy, the Polish milk in question was imported to make sure there was enough milk on the shelves in winter. This has not affected any consumer or dairy farmer.
Network 24 reports that after a large import of Polish long-life milk in 2017, Milk SA appointed a working group to look at a possible tariff application for milk from the European Union (EU), with which South Africa signed an Economic Partnership Agreement (EEA) for free trade.
Mr. Alwyn Kraamwinkel, chair of the working group and CEO of the South African Milk Processors’ Organization (Sampro), said in 2017 a record volume of 38.8 million liters of full-cream lung milk, about 4% of the local demand, was mainly imported from Poland. Last year it dropped to 17.1 million liters, about 2% of demand.
No long-life milk was imported from August last year until March this year. “Imports started again in April. Although the import patterns vary from year to year, this year’s imports are likely to be similar to last year’s quantity, ”he says.
According to him, one must consider that South Africa also exports long-life milk.
Article 35 of the EVO provides for security rights, also known as protective tariffs, on imported products from the EU, provided that it is not higher than the normal import tariff for other countries, which is currently 0% for long-life milk.
Kraamwinkel says the working group is waiting for the Department of Trade and Industry to complete its procedure and policy for Section 35 applications.
“We will then, taking into account the size and price of imports and the impact it has on the dairy industry, determine whether an application for both an ordinary import tariff and a security duty, in light of the criteria set by the commission for international trade administration (Itac) will be appropriate. ”
In both cases, through extensive and detailed information, one must be able to prove damage to the local industry.
Mr. Bertus van Heerden, chief economist of the Milk Producers’ Organization (MPO), says that if one calculates the value of the dairy industry’s gross domestic product, imported milk will have an unnecessary, unfavorable effect on it. South African processors can produce milk cost-effectively.
According to him, imports change the atmosphere in the market and influence negotiation tactics. “From a dairy farmer’s point of view, the balance of power seems to be shifting even further down the processors and other stakeholders down the value chain.”
Imported long-life milk that arrived in South Africa from May to July had free on-board prices ranging from about R6.50 / liter to R9.50 / liter. Together with further costs of about R2.50 / liter, this brings the total cost from R9 / liter to R12 / liter.
Although local milk production was down 0.13% from January to July this year compared to the first seven months of last year, Van Heerden says it should be seen against the backdrop of high growth during this period last year.