Seprod moves for milk industry shake-up

Seprod moves for milk industry shake-up

BY KARENA BENNETT Business reporter

Tuesday, February 21, 2017

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Chief executive officer of Seprod Ltd, Richard Pandohie is prepared to invest $180 million in a drive to revitalise Jamaica’s dairy industry — but is calling for Government to create the framework for a viable sector.

According to Pandohie, a private-public sector partnership plan — similar to the models adopted by the island’s pork and poultry industry — is what is needed to support talks by the Government that by 2020 the dairy industry will reduce Jamaica’s annual dairy import bill by $3.01 billion, and add approximately 1,300 jobs to the agriculture and manufacturing sector.

In a round-table conversation with the Jamaica Observer on Monday, the CEO pointed out that Seprod will invest $145 million in a heifer redeployment programme over the next three years to kick-start the revitalisation drive, in line with the Jamaica Dairy Development Board’s (JDDB) programme. The remaining sum will be spent on trucks for collection from farmers, scholarships and internship programmes.

Seprod’s return on investment will come from the milk produced by local farmers. The company hopes to provide 500 pregnant heifers to established dairy farmers.

"Essentially, the model we are looking to follow is like the pork and poultry. Jamaica is now self-sufficient in both because of investments made in the industry.

"We are prepared to take on that upfront, financial burden of the farmers and would give the farmers pregnant heifers which would cost roughly $120,000, and only when they start producing milk will we then take the milk and use part of it as payment for the animal and the rest towards other investment on the farms," Pandohie reasoned.

Ultimately, the dairy industry is targeting 24 million litres of milk production by the year 2020, up from 12.7 million litres produced in 2016. It also means that the industry needs to grow by at least 2,100 milk-producing cows over the next three years.

But Pandohie is adamant that any effort by industry players could prove futile if the Government does not take swift action in putting proper infrastructure in place to support the industry growth.

Seprod is now calling on the Government to put in place and monitor an appropriate regulatory framework to help in safeguarding and stimulating the growth requirement to satisfy the objectives of and preserve the domestic market, or the wider Caricom market.

Chief among the nuisances is the need to place a volume cap on milk powder imported for repackaging and reducing this cap each time the fresh milk production increases.

"There is a misguided policy on getting cheaper food and so the policy decision around it was liberalised, which literally devastated the industry from 40 million to 12 million litres today; hundreds of farmers and we are now down to under 150 farmers. Prices have been coming back up on milk. There is a demand, especially since the launch of the Drink Real Milk campaign, and we are saying now is the time to get going," he said.

Pandohie added that the high incidence of cattle larceny impacts not only current farmers but serves as a disincentive for potential partners, as well as competition from incorrectly labelled products purporting to be milk allowing manufacturers to enter the market without paying cess.

"It must be mandated that they pay cess and rectify their labelling to reflect the correct description. Almond milk is 90 per cent water and should be labelled almond beverage. A similar argument applies to soya milk," the CEO said.

There is also a call to increase the number of Rural Agricultural Development Authority (RADA) officers, veterinarians and qualified, trained personnel to impregnate animals.

"We’ve started because we don’t have time. We will continue to partner with companies from the Drink Real Milk campaign and we have also begun engaging farmers.

"Where we need the assurance is on things that we don’t have control of, like policy decisions and government resources. But we are hopeful that in the budget presentation Minister Samuda will announce investment in RADA and more livestock farmers to drive agriculture," he said.

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