By Ndafadza Madanha
FINANCE and Economic Development Minister Professor Mthuli Ncube has extended the suspension of duty on milk powder for 2021 owing to the raw milk deficit in the country.
Presenting the 2021 budget statement Professor said fiscal support given to the dairy since 2015 had resulted in increased capacity utilisation from 25% to 75% recorded in 2019.
However, the increased capacity utilisation still falls short of the national raw milk demand of 130m litres.
“In support of the growth and development of the dairy industry, Government has, over the years, availed a Duty Free Importation Facility for inputs which include milk powder, raw cheese and packaging materials, among others. 609. Capacity utilisation for the dairy industry, has, thus, increased from 25% in 2015 to 75% in 2019.
This is mainly due to successive droughts and high cost of stock feeds, which has forced farmers to reduce herd sizes to remain viable. The raw milk supply deficit is expected to continue in the medium term, hence the need to augment local production.
I, thus, propose to extend duty suspension on milk powder for the year 202”.
Minister Ncube also announced suspension of Duty on Raw Cheese due to inadequate supply of raw milk, a key ingredient in the processing of cheese, Government, in 2020, suspended duty on raw cheese.
“In view of the continued deficit in the supply of raw milk, I propose to extend the suspension of duty on ring-fenced quantities of raw cheese, for a further period of 12 months, beginning 1 January 2021.”
Milk consumption per capita in Zimbabwe is still very low and is estimated to be between seven to eight litres per person per annum, indicative of the potential the industry has if compared with other regional countries like Botswana and South Africa who consume between 37 and 79 litres per person per annum.
The decline in the local dairy industry product has led to the influx of South African products which now dominate the local market.
Research carried by a local stock broking firm revealed that the dairy sector small processing plants are sometimes more profitable than large operations.
“The processing plants in the globalized environment are not always scale-dependent and small operations may be more economically efficient than larger plants, encouraging the participation of smaller enterprises in niche markets” said the report. ENDS