MOST BARBADIANS have consumed cow’s milk at some stage in their lives. And those that have done so have probably drunk local milk.
As with chicken, Barbados is self-sufficient in milk, and has been for some time, even though milk, in various forms, is still imported.
In recent years the industry has undergone challenges, with main processor Pine Hill Dairy (PHD) and private dairy farmers who supply it turning to Government for assistance in light of the financial difficulties that led PHD to reduce the farmers’ milk quotas.
PHD directors Anthony King, and Richard Cozier, who is also chief executive officer of the company’s immediate parent Banks Holdings Limited, addressed the issue in its 2014 annual report.
“We are operating in an environment of declining milk consumption, a direct consequence of the depressed economic situation and current pricing structure.
In January, while waiting for a response from Government on the Dairy Industry Proposal, we reached agreement with farmers to modify the payment structure for farm gate milk and introduced a tiered system based on the category of use of the milk,” they reported.
“The long-term sustainability of the local dairy industry remains of critical concern. Both the Pine Hill Dairy, as processor, and the farmers are struggling to maintain profitability in an environment of increasing input costs.
“We remain hopeful that Government will continue to demonstrate their commitment to the survival of this industry and provide a positive response to the Dairy Industry Proposal submitted jointly by the dairy farmers and ourselves towards the end of 2013,” they added.
Their prayers were answered recently in Government’s Financial Statement and Budgetary Proposals delivered by Minister of Finance and Economic Affairs Chris Sinckler. He said the current state of the local fresh milk industry “is a concern for both farmers and processors and there is need for a resolute solution to address the current situation”.
“The local dairy industry’s output for 2014 has been estimated at $42.5 million, a far cry from the $60 million plus it was some time ago. The contributing factors to the decline were identified and one of the major components was pricing,” he said.
“Unlike most of the countries with which Barbados trades, there is currently no dairy subsidy or in incentive at the farm level to facilitate processed fresh milk reaching consumers at an affordable price,” Sinckler noted.
He therefore announced the introduction of a tax on all milk and milk substitutes effective August 1. The cess will be five per cent for milk products containing 60 per cent or more of liquid fresh cow’s milk and 10 per cent for all other milks and milk substitutes, including milk power.
Both the PHD and dairy farmers have welcomed that decision, which was based on their recommendations to Government.
However, the challenges facing the dairy sector are not restricted to Barbados or the Caribbean. Last month Rabobank, an international specialist in food and agri-business banking, said that with global milk production rising faster than local demand growth (except in the US where much of the growth was from domestic consumption), exporters were forced to search for overseas markets to sell to.
This was taking place at a time when “China has slashed their imports and the Russian market has been largely closed”.
How the market performed next year would depend on China’s appetite for imported milk, the report added. The impact of the weather in large producers like Australia and Argentina was another factor.