Obert Chifamba Agri-Insight —
The boot is now on the other foot for the dairy sector! Yes that’s real, especially after milk volumes plummeted to a record low of 37 million litres in 2009 then began rising steadily over the years.
Although a litany of challenges plagued the gradual ascend, the latest national statistics indicate that by the close of last year the volumes had risen to 65 million litres.
That’s a 13 percent increase from the 58 million litres recorded in 2015. This, according to the Ministry of Agriculture, Mechanisation and Irrigation Development, is in line with the sector’s target annual growth of 12 percent.
At its peak in the late 1990s, the sector once recorded 256 million litres in a single year. This is a laudable feat by this sector particularly in an economic climate in which it is easier to wobble than to walk.
Of course, the sector’s promising journey from its darkest hour in 2009 to the present has been attributed to various intervention initiatives, thanks to the mutual co-operation between the private and public sector stakeholders in the industry aimed at revitalising the local industry to ensure self-sufficiency in the commodity.
Also, restrictions on imported dairy products, which can be produced locally have essentially allowed local industry to rebuild on the background of increased local sales resulting in increased capacity utilisation.
At the moment, the sector has turned self-sufficient in all dairy products with exception of cheese, butter and powdered milk that are still being imported from neighbouring South Africa mostly.
The close co-operation between Government and private sector climaxed in the birth of the Dairy Revitalisation Project plus the adoption of systems, which ensure that prices of local and imported long life milk are at par to prevent dumping of cheap imports.
This has resulted in increased capacity utilisation by local processors thus paving the way for investment in the sector.
Unlike in other sectors, for instance, the cotton and tobacco industries, where Government’s efforts to co-operate with all concerned stakeholders have had a lukewarm reception that left farmers at the mercy of either merchants or price setters, the dairy industry has opened up to Government involvement, which helped boost confidence of value chain actors.
This has in turn resulted in huge investment being made in growing the production base through herd growth, that is, the importation of dairy heifers, promoting breeding locally and improving production efficiencies as well as installation of modern processing equipment and machinery.
Of course challenges have checked the momentum of the sector’s revolutionary charge but the stakeholders and Government have found ways of circumventing them- something that other sectors should emulate for the good of production and ultimately the economy.
The perennial price wars in both the cotton and tobacco sectors have always seen Government intervening in efforts to level the playing field but somehow one or two of the concerned parties have always found excuses to continue the old ways.
Cotton and tobacco merchants have always blamed the poor prices they offer on the international market and have not bothered to work with farmers and Government to find a common ground that leaves all parties happy.
The dairy sector has a chain of stakeholders that all willing to play ball, going the extra mile to improve the sector’s performance starting from the farmer to the markets.
Like I said earlier, the sector has many challenges to surmount. To start with, production costs are still high, which of course emanate from the not-so-friendly cost of feeds. And to get round the problem, Government enacted a policy framework that encourages more cropping to allow for cheaper feed prices, which has been largely achieved through increased contract farming and increased local milling.
With more maize, soya, and wheat being grown and milled locally, their by-products (bran) can be channelled towards feed manufacturing. And who knows, prices of feed may even drop, come the end of this season since many farmers will be harvesting lots of cereal crops, thanks to the inception of the Command Agriculture programme.
The unavailability of long term funding has in most cases seen the sector failing to completely roll out or even folding up some of their intervention programmes, which has slackened its recovery pace.
To counter this, the Industry Dairy Revitalisation Project resorted to raising funds for developing the industry through voluntary levying of imports.
Government on the other hand adopted a policy that enables farmers to access critical funds needed for capital expenditure and to finance their seasonal cropping requirements that in most cases require lots of funds from reliable sources as well.
Inefficient production systems have also played their part in making life difficult for the dairy farmer, which obviously has a boomerang effect across the entire sector.
To counter this, the industry has set targets of reducing the cost of producer milk by between 5 and 8 percent per year through practical training programmes for farmers, which will help eliminate reliance on hiring specialist services that add extra costs to production.
The current price of milk is $0,53 for a litre and the target is to have it selling at $0,46 per litre by 2019. They are also working towards promoting investment in alternative energy sources instead of over-reliance on electricity, which is expensive and incidentally erratically available in most cases.
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