The Zimbabwe Association of Dairy Farmers (ZADF) says the sector will leverage on the recent policy measures exempting dairies from paying duty in foreign currency for certain selected inputs to boost productivity as well as enhance its contribution to economic growth.
Last month, Government exempted 12 food and beverages companies from paying duty in foreign currency when importing certain raw materials necessary for their production processes in a move expected to boost production and consumption of locally manufactured goods. This comes at a time Government is pushing for the industrialisation agenda.
ZADF chairman Kudzai Chirima told the Herald Finance & Business that this will benefit everyone along the dairy value chains.
“The amendment to the Customs and Excise through Statutory Instrument 170 of 2019 exempting dairies from paying duty for some of the critical imports is indeed a welcome development by our dairy industry,” he said in email responses.
“This is so, because, the exempted companies will find it easier to import the required and specified raw materials without the hustles of trying to secure foreign currency from the interbank market, given that the products they manufacture from the same raw materials are sold locally in local currency, especially in the face of critical foreign currency shortages in the economy.
“Such a move will again make the benefitting companies more competitive and, hence, expand their production, boost their incomes in their respective business operations with an anticipated backward integration to the dairy farmer of a competitive producer price.”
Mr Chirima made a passionate plea to Government to extend the exemptions to a wider range of other imported raw materials that are used in the production process in the 2020 National Budget Statement.
This is expected to help maintain the growth trajectory in the milk production, which has been on a steady increase this year.
According to figures from the Dairy Services, total raw milk supply for the first half of 2019 was 39,2 million litres representing a 13 percent growth compared to the same period last year.
Mr Chirima attributed the growth to various interventions and initiatives by both the private and public sector stakeholders in the industry aimed at revitalising the dairy industry to ensure self-sufficiency.
However, the annual milk production as of 2018 stood at 75,4 million litres, falling short of the annual national requirement of 120 million litres.
Large scale dairy producers are contributing 97 percent while the remainder is coming from small scale farmers.
Despite the anticipated growth this year and going forward, the ZADF is wary of the effects of climate change on national herd as well as the final milk output.
Said Mr Chirima: “Given the challenges being faced by our industry from the El-Nino induced drought as well as from the devastating effects of Cyclone Idai, which affected one of our major milk producing regions (Chipinge), these challenges may lead to the industry failing to meet the set target.
“However, efforts are being made to ensure that production targets remain on track.”
Government is targeting milk production to rise to between 97 million litres and 100 million litres per annum by the end of 2019, leveraging on increased national herd — approximately at about 38 000 — and sectoral protectionist measures, and is hopeful that by 2022 Zimbabwe would be milk self-sufficient.
Zimbabwe used to produce approximately 260 million litres of milk in the early 1990s, however, production of raw milk has drastically declined to levels below the annual national demand of 120 million litres, implying a deficit of 45 million.