DR PAUL Jennings, Chief Executive Officer (CEO) of the Jamaica Dairy Development Board, is recommending an increase in the duty on imported ice-cream, so as to create an expanded market for the sale of local milk.
"I propose that the duty on ice-cream be increased to 75 per cent, consistent with the current duty on imported condensed and evaporated milk," he said.
Imported ice-cream currently attracts an import duty of 20 per cent.
He was speaking recently at the 10th Annual General Meeting of the St. Elizabeth Dairy Co-operative at Cabbage Valley in St. Elizabeth.
Dr Jennings noted that the proposed increase to 75 per cent would open up marketing opportunities for prospective local ice-cream producers, who use fresh milk. He said this would be achieved because the increase in duty would cause the prices of the imported product to rise and this would make local products more price-competitive. This new market opportunity, he said, would result in the production of approximately five to six million litres of ice-cream, or the use of an additional three to 3.6 million litres of local milk.
Dr Jennings, who reported that his recommendations had been submitted to the Minister of Agriculture, Roger Clarke, said he expected a positive response from the Government, adding that this was one of the strategies that would stimulate the development of Jamaica's Dairy Industry.
He said there would be justification for increasing the current levels of import duties on dairy products given the continued refusal of North America and the European Union (EU) to observe World Trade Organisation (WTO) agreements regarding the removal of subsidies. The US Congress, he indicated, had agreed at the end of 2001 to a US$2 billion extension to their subsidy programme, while similar measures had been implemented by Canada and the EU.
Despite the recent decision by Nestle to reduce the price of Grade 'A' milk from $22.14 to $18 per litre and to reduce purchases by four million litres this year, the CEO told the dairy farmers that he remained confident of the success of the Jamaican Dairy Industry.
In order to successfully implement its Milk Enhancement Programme, the CEO said it was important for Government to adopt a "focused" short to medium term strategy.
Mentioning other possible initiatives, Dr. Jennings said that Government should seek to immediately commit itself to implementing the World Health Organisation (WHO) minimum recommendation of 200 millilitres of fresh milk per day for every child of school age. This, he suggested, should be phased in over the next three to five years. The impact of this policy would create market for an additional 30 million litres of fresh milk by the School Feeding Programme, in the short to medium term. He explained that despite the fact that this would cost the Government an additional $500 million, this figure was far below the cost of recent concessions to other sectors.
Dr. Jennings further proposed that the Government speed up the implementation of the Emancipation Lands Programme, announced by the Prime Minister. The programme involves settling 250 to 300 trained young dairy farmers on lands over the next five to ten years. He mentioned that the potential benefits of such a programme included an additional yield of 15 million to 18 million litres of milk. This represents the creation and distribution of wealth to the tune of $330 million to $400 million per year in rural Jamaica.
Continued reduction in agricultural lending rates below the current nine per cent level to promote investments in pasture development and herd improvement, was another proposal made by the CEO. He stressed that this was critical since current investigations by the Dairy Board suggested that even at high levels of investments, small dairy farms that are milking 10 cows on two hectares of improved pasture are unlikely to yield internal rates of return above 10 to 12 per cent.
"Jamaican farmers have no chance of competing against their counterparts in the major milk producing countries such as the United States, where government securities as low as 1.75 per cent and lower now prevails," he said.
Dr. Jennings, however, pointed to the Government's awareness of the critical role that the dairy industry played in the development of rural Jamaica. In light of this, he commended the Government for its commitment to Jamaica attaining self-sufficiency in milk production in the long-term, and noted that the existence of the Jamaica Dairy Farmers Federation, and the recent approval by Cabinet of the tabling of the Jamaica Dairy Development Board Act in Parliament, were evidence of this commitment.
