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Al-Ahram Weekly On-line 19 - 25 October 2000 Issue No. 504 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly On-line 19 - 25 October 2000 Issue No. 504
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Elections Palestine International Economy Opinion Culture Focus Features Travel Sports Profile People Time Out Chronicles Cartoons Letters Milk battle
By Eman YoussefIn response to complaints from Egyptian dairies about the negative impact of inexpensive powdered milk imports on their industry, the government has raised tariffs on this product. The decision, however, has raised the ire of foodstuffs manufacturers who use milk in their products.
This measure follows complaints by the Society for Livestock Development and the Egyptian Association for Milk Production to the anti-dumping and anti-subsidy authority affiliated with the Ministry of Economy and External Trade about the impact of cheap imports on their members' businesses.
Milk producers were alarmed by the increase in the imports of powdered milk from 27,000 tons in 1998 to 43,000 tons in 1999. Added to this, Ministry of Economy figures indicate that although milk production increased from 3.4 million tons in 1998 to 3.6 million tons in 1999, revenue actually decreased during the same period.
In spite of legislation, the practice of employing children has continued. To increase awareness of the importance of applying the law and its impact on Egyptian exports, the Federation of Egyptian Industries (FEI) recently held a seminar on this issue.
While the tariff decision was welcomed by dairy owners, manufacturers of foodstuffs containing powdered milk say increased duties leave them with no choice but to raise their prices. "Increasing duties to 45 per cent on imported powdered milk will lead to an increase of 25-50 per cent in the prices of products for which powdered milk is an essential ingredient. These include biscuits, chocolates, ice creams, pasta and baked foods," said Fathi Kamel, director of the Middle East Company for Food and Dairy Industries. Before this recent decision, duties on powdered milk ranged between five and 20 per cent.
It is not only the local consumer who will be hit by increased duties, but Egypt's exports too, says Kamel. "Egypt has steadily increased its exports of dairy products but following the increase of tariffs we might have to stop exporting these." The Gulf countries, which imported approximately 15,000 tons of processed cheese and 5,000 tons of white cheese in 1999-2000, is a major market for Egyptian milk products.
In making its case for the reduction of tariffs, the Dairy Development Association, which represents manufacturers in the food processing industry who use milk in their products, emphasises the impact on the consumer of the increased duties.
In the meantime, to deal with the expected decline in demand for his company's products, Kamel said that he will reduce production by 20 per cent and lay off workers. A source at Nestlé expressed concern about the impact of duties on its earnings, adding that it, too, will lay off workers as one measure to stem its losses.
To develop a long-term solution to the current impasse, the Dairy Development association suggests establishing a committee with members from each sector concerned with production and pricing.
Aside from its lower cost, powdered milk is preferred by food manufacturers because of fluctuations in milk production throughout the year, say these manufacturers. Because of the limited period for which milk can be stored, Kamel also suggested that powdered milk be produced locally from the surplus of liquid milk, rather than letting this go to waste.
El-Sayyid Abu El-Komsan, head of the import-export division of the Ministry of Economy and External Trade said that the increase in tariffs on powdered milk is a temporary measure imposed for 200 days. A decision on long-term policy is imminent, added Abu El-Komsan.
Minister of Agriculture and Land Reclamation Youssef Wali has suggested that the import of powdered milk should be reduced to 30,000 tons annually. He also advocated that packaging for all products containing milk indicate the percentage of powdered milk used.
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