Namibia’s ailing dairy industry needs a myriad of strategic interventions to addresses the industry’s challenges and set forth a path towards a resilient and thriving dairy sector, an industry report released this month by the High Economic Intelligence (HEI) recommends.
Since 2004, the Namibian dairy industry has been on the verge of extinction due to the influx of cheaper dairy imports from South Africa. Beyond this, the Namibian dairy industry grapples with an array of challenges that have led to low milk production. Currently, a mere 10 farmers persist in supplying milk to Namibia Dairies, marking a significant decline. These formidable obstacles include cheap imported dairy goods, unfavorable exchange rates, escalated feed expenses for cattle, recurring droughts impacting dam water levels—particularly evident at the Hardap Dam—and the adverse repercussions of the COVID-19 pandemic on the economy.
“Realising a stable local production hinges on multifaceted investments. Vital components encompass research and development initiatives, training endeavors, and the acquisition of knowledge in innovative farming techniques.
“Concurrently, the establishment of government support systems, robust dairy cooperative networks, diversified feeding sources, and efficient milk processing (cooling) facilities stands paramount in safeguarding industry survival. An integral facet of securing the dairy industry’s prosperity entails refining the legislative framework, encompassing strategic policies, standards, and ordinances,” the report reads in part.
To shield the industry, an eight-year Infant Industry Protection (IIP) initiative was implemented, concluding in 2008. Despite this protective measure, the sector struggled to fulfill domestic demand even during the IIP period.
“Sectors reliant on net imports often exhibit inherent fragility, rendering them susceptible to external market shocks that disrupt sustainable growth. The prospects for the Namibian dairy industry remain uncertain, given the compounding challenges it confronts. To ensure the industry’s viability, it becomes imperative to cultivate a favorable environment or enact interventions that foster economies of scale across various segments of the value chain.
“This strategic approach is vital as the influx of low-priced imported dairy products undermines the domestic value chain and erodes returns for dairy producers. Furthermore, constrained by a diminished dairy cow herd, local dairy farms struggle to meet substantial milk demands, consequently impairing producers’ profit margins,” further explained HEI.
HURT BY IMPORTS
Over the years, Namibia has witnessed a significant increase in the importation of dairy products. Between 2010 and 2022, Namibia’s average annual imports of dairy products amounted to approximately N$5 million. During 2022, the total value of imported dairy products surged to about N$476 million with a monthly average of N$39.7 million. The highest value was recorded for the month of September valued at N$61 million while the lowest was recorded in July valued at N$28 million. In December 2022, the country imported dairy products valued at N$39 million, with the highest value being that of (UHT) long-life milk, unflavored milk and cream without added sugar or other sweetening matter, and yogurt.
The country remains a net importer of dairy products from countries such as South Africa, Zimbabwe, Sweden, Denmark, and Portugal, with the importation of UHT and extended shelf-life milk witnessing substantial growth. In 2022, the dairy industry contributed approximately 0.63% to the nation’s food manufacturing sector and accounted for 0.07% of the Gross Domestic Product (GDP).
Milk production challenges
According to Namibia Dairies, the country’s annual domestic milk consumption requires approximately 38 million liters. However, between 2010 and 2022, Namibia’s average yearly milk production amounted to a mere 21 million liters, signaling an evident shortfall in meeting the nation’s yearly milk demand. Imports account for roughly 62% of the milk supply, with the remaining 38% sourced locally. Notably, the year 2015 recorded the highest production, totaling about 24.4 million liters, attributed to favorable water levels in the Hardap Dam.
“It’s crucial to highlight that water availability at the Hardap Dam significantly impacts the production of vital dairy feed, such as lucerne, pivotal for optimizing milk quantities,” HEI said.
Since 2019, the local supply of raw milk began to decline due to recurring and devastating droughts. The Namibia Dairy Producers’ Association reported a significant drop in raw milk production, plummeting from 21 million liters in 2019 to 17.2 million liters in 2020—a staggering 21% decrease in volume. In 2020, Namibia Dairies invested approximately N$577 million in milk production, yet no profits were realized.
The trend continued into 2021, with milk production remaining stagnant at 17.2 million liters, reflecting the challenges faced by the industry. These hurdles included a reduction in the number of milk-producing cows and diminished animal feed (fodder) supply—critical for milk production enhancement. These setbacks resulted from inadequate rainfall, leading to poor grazing conditions, compounded by the cost escalation in production brought about by the Covid-19 pandemic.
“According to Namibia Agricultural Union (NAU), the annual expenditure of the dairy sector on milk production is estimated at N$1 billion. Alarming is the fact that for three consecutive years—2019, 2020, and 2021—the dairy industry has reported negative revenue. In 2021, a notable 12.3% decline in production value was recorded, highlighting the ongoing challenges confronting the sector,” HEI said.
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