Imported dry milk a growing threat to local dairy farmers

May 23, 2016 at 2:53 pm

SPEAKING on a calling attention notice in the National Assembly on May 11, the federal commerce and food security ministers agreed on the need for effectively curbing imports of skimmed powdered milk and whey powder to protect the interests of local dairy farmers.

But such a consensus has always been there and reflected in taxes and tariffs. But it is not enough as increasing imports indicate. Commerce Minister Khurram Dastgir Khan clarified that it was not merely 20pc, as stated earlier, but a total of 43pc tax which is being collected on the import of dry milk, whey powder and meat. And the breakup is as follows: 20pc customs duty; 17pc sales tax and 6pc withholding tax on their import.

Federal Minister for National Food Security Sikandar Hayat Bosan favours an increase in duty on the import of milk and whey powder rather than a ban on them as hinted at by the key mover of the calling attention notice Rana Muhammad Hayat Khan.

Mr Rana was of the view that the only way to bring to an end the growing use of imported dry milk, particularly among those from low-income groups, was to either ban it or subject it to over 100pc duty. Most of the milk and whey powder, he pointed out, were being imported from India. But the dry milk produced locally is not enough to fill the vacuum if imports are stopped or slashed drastically.

Over 50m people earn or supplement their livelihood from livestock sector. The government must introduce farmer-friendly policies to help dairy workers overcome their predicament, says Sikandar Hayat Bosan

It is interesting to note that the calling attention notice was moved by members of treasury benches who appealed to their own government to take measures to protect interests of dairy farmers.

Mr Bosan said he had requested the government last year as well to increase the import duty on the whey and milk powder, but it was not accepted. The movers of the notice claimed that India has imposed 68pc import duty, Turkey 120pc, Morocco 60pc while in Pakistan it is only 20pc.

The dairy sector, which is trying to come out of the age-old methods of production, had long been urging the government to enhance duty on import of skimmed milk powder and whey powder which was badly hurting their business because commercial buyers prefer to buy imported milk which is much cheaper than the fresh milk.

Although the farm gate price of fresh milk is higher than the dry milk it is still much in demand which is increasing by 10pc on annual basis. The problem arises from the fact that fresh milk has been unable to catch up with the growing demand over the years for its production does not exceed beyond 4-5pc per annum and thus leaves ample space for dry milk to enter the market in a big way.

Meanwhile, the cost of production of fresh milk has increased because of soaring prices of buffaloes and cows and also of fodder making it hard for small farmers to feed their animals. “If the trend of growing cost of production continues, the livestock sector and small farmers will not be able to survive,” Mr Bosan said.

Over 50m people earn or supplement their livelihood from livestock sector. The government must introduce farmer-friendly policies to help dairy workers overcome their predicament, he says.

The National Assembly speaker has set up two-member committee, consisting of Mr Bosan and Mr Dastgir, and also directed the standing committees of the two ministries to hold a joint meeting to prepare recommendations on the issue. .

Separately, the Federal Board of Revenue (FBR) is reported to have proposed to the government to withdraw zero-rating status of the milk sector, besides imposition of 10pc sales tax on branded milk and increasing the tax on other dairy products to 17pc in the budget 2016-16.

If approved, these measures would force consumers to pay an estimated additional Rs250bn to milk producers — packaged and fresh. Dairy people say any such changes in the tax structure will not only stop tax refund payment, but will also push up milk by Rs8 per litre.

In the outgoing budget, the Finance Minister Ishaq Dar had imposed 10pc sales tax on yogurt, cheese, butter, cream, desi ghee, whey and cream claiming that only rich class consume these expensive dairy products.

On the budget eve last year, hundreds of dairy farmers staged a protest in Islamabad against the government’s flawed policies by pouring thousands of litres of milk in front of parliament. The protesters were seeking reforms in official policies to save the dairy sector from being ruined by import of dry milk. A spokesman of the protestors pointed out that milk is produced by millions of farmers but it is cheaper than water for the industry as farmers are unable to sell their milk at a reasonable price.

Last few years saw a rise in skimmed milk’s imports as some big shopkeepers began using it in the manufacture of confectionery, sweetmeat, biscuits and other dairy-related products which they previously did by using fresh milk. Though Pakistan happens to be one of the world’s largest milk producers, it spent $341m on import of dry milk and whey powder in the years from 2012 to 2014.

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