Budget 2015-16: Dairy industry losing sleep over proposals

Import duty on milk powder, whey powder to be decreased.

ISLAMABAD: A week after the budget announcement and several industries continued to register their dismay. The latest to join the bandwagon is the dairy industry that shared its disappointment at the budget proposal of reducing import duty on skimmed milk powder and whey powder.

An additional sour point is the imposition of a new tax on feed that will adversely hurt local dairy farmers.

In the budget, the government revealed that it proposed to further reduce the import duty on skimmed milk powder and whey powder by 5%. The development comes despite the fact that local dairy farmers had been demanding to increase import duty as uncontrolled imports were hurting dairy farmers.

According to the budget proposal, duty would come down to 15% from the earlier 20% for South Asian Association of Regional Cooperation countries and to 20% from 25% for the rest.

Farmers argue that this will help India dump its dry milk powder in Pakistan. In the last three years, Pakistan has imported over $341 million worth of dry milk powder in the country to substitute locally-produced fresh milk.

“This step will be benefiting Indian exporters of milk powder as Pakistan has imported over Rs7.2 billion ($72 million) worth of skimmed milk powder from India in the last five years despite being the world’s third largest milk producing nation,” a source in local dairy industry said.

One farmer said the federal government did not even listen to requests from the Ministry of National Food Security and Research and Punjab Livestock Department.

Additionally, sales tax on soya bean meal has been increased with the government also imposing 5% sales tax on cattle feed. According to the budget, the government will levy 5% sales tax on other products such as calf milk replacer and premixes for cattle feed and import duty increased from 5% to 10%.

“The apathetic attitude of the government towards the sector will ruin the country’s dairy products and the agriculture industry as a whole which contributes 21% to the gross domestic product,” said a farmer from southern Punjab.

“Our government believes that urban development is the only solution to the country’s problems and is ignoring 70% population that earns livelihood through agricultural and dairy activities,” he said, adding that the government appears to be converting Pakistan into a dry milk powder-dependent country instead of becoming self-sufficient.

Published in The Express Tribune, June 13^th,  2015.

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