Celebrating dairy – in spite of crisis

Changes on the horizon for Namibia Dairies

22 June 2020 | Business

Every year, June is celebrated as “Milk Month” around the world – a month that promotes the health benefits of milk consumption and also provides an opportunity to acknowledge those who produce milk and other dairy products.
It is a reality that operating in the dairy industry is tough – a reality that Namibia Dairies knows all too well. Having faced turbulent times before, external pressures have finally brought the company to a turning point aimed at sustaining the future of Namibia Dairies.
According to Namibia Dairies’ technical head Pieter van Wyk: “Since its infant industry protection was phased out over a decade ago, the local dairy industry has been vulnerable to dairy products imported from other countries, particularly South Africa. Local industry players struggle to compete with these cheaper imports from markets with lower input costs and larger economies of scale. The local dairy industry is further disadvantaged by the value-added tax (VAT) that must be paid on Ultra-High Temperature (UHT) milk sold in Namibia, as well as by unfavourable exchange rates when importing specialized supplies.”

Additional strain
The drought experienced by Namibia in recent years exacerbated the strain on the country’s dairy industry, as evidenced by farmers who have already had to exit the sector. With the Hardap dam running exceptionally low last year, there was a shortage of fodder, its price surged and farmers had to resort to importing fodder.
The good rains received this year may have provided minor relief for some farmers with smaller outputs, but the same cannot be said for players in larger, intensive farming activities, such as at the !Aimab Superfarm from where most of the Dairies’ milk is sourced.
“The exiting of farmers and the overall reduction in milk production resulted in the current shortage of UHT milk produced in the country, which is set to further decrease,” Van Wyk said. “Currently, Namibia Dairies has been receiving about 800 000 litres less raw milk per month from its farms than it did two years ago.”
He said that this decreased supply was recently met with an increased demand for UHT and extended-life products compared to fresh products owing to Covd-19. Consumers have been shopping less and needed products that would last longer on their shelves.
To sustain the company, Namibia Dairies has had to adapt to the sudden change in consumer demand.

Expansion on the horizon
However, no matter how bleak these market conditions seem, Namibia Dairies is far from raising the white flag. This necessity for change is, in fact, being embraced by Namibia’s dairy industry as an opportunity for transformation.
Said Van Wyk: “Thanks to our loyal consumers and everyone else who contributes to this industry, there is still a future for dairy in Namibia.”
Thus, Namibia Dairies is proactively re-imagining its offerings and operations and its portfolio of products will be expanded and diversified.
The company remains committed to providing the country with its Nammilk brand, but in future, Namibia Dairies will be pushing the boundaries beyond its current dairy and non-dairy offerings. Economies of scale and potential markets will have to be assessed to determine the feasibility of any new offerings to complement the existing product mix.
The company has the largest cold chain distribution network in Namibia, connecting it to local depots across the country.
According to Van Wyk, Namibia Dairies will look different in the near future and while it will continue to leverage its strengths such as distribution and its reputation for quality products, change and innovation are required in order to enhance sustainability while continuing to provide our consumers with trusted quality products.

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