CABINET has approved the purchase of milk processing equipment worth US$1.7 million for the Jamaica Dairy Farmers Federation (JDFF), in an effort to keep the domestic dairy industry viable.

Information minister, Colin Campbell, told reporters attending yesterday’s post Cabinet press briefing at Jamaica House that the equipment, to be supplied by two companies based in India, will be used to upgrade the federation’s processing facility in Old Harbour to handle 60,000 litres of milk per day while converting a maximum of 50,000 litres of milk per day into milk powder, butter or other products.

This is the latest measure by the government to shore up the local dairy industry, which has fallen on hard times in the face of competition from imported dairy products as a consequent of trade liberalisation since 1992.

While imports of dairy products consisting mainly of milk powder jumped from 10,877 metric tonnes in 1992 to an average of 15,772 metric tonnes up to 2000, local milk production slumped from 38.8 million litres in 1992 to an average of 28.7 million litres at the end of 2000.

Following a review of the local dairy sector by a mission from the Commonwealth Secretariat in summer of 1996 the administration agreed to the implementation of a milk production enhancement programme; the establishment of a co-operative federation of milk producers, and the establishment of a dairy board.

Consequently, the federation was formed in 1998 as the “primary vehicle” to spur milk production, Roger Clarke, the agriculture minister reported to Parliament in April of this year. He said then that government had agreed to purchase 3.2 million litres of milk to be used in the state-run school feeding programme for 2002/2003.

Government made the gesture in previous years as dairy farmers faced the decline in purchase from private processors, but the JDFF has been unable to supply the agreed volume.

Campbell said yesterday that the purchases approved by Cabinet would “consolidate” the position of the JDFF in the market and “ensure that members do not have to make distress sales” because the processing plant will be expanded to meet future needs.

The equipment ordered includes three milk cooling stations, two road milk tankers, pasteurisation equipment and equipment to manufacture milk powder and butter.

Dairy farmers have complained consistently that milk processors, while purchasing milk at relatively low prices at the farm gate, have added significant cost to the product causing it to be price uncompetitive at retail outlets.

Money to buy the new equipment comes from a loan agreement between the United States Agency for International Development (USAID) and the Government of Jamaica in May 2000. USAID provided Jamaica with US$10 million of rice produced at subsidised prices in the US, under the PL480 programme, which was allowed to be sold locally to generate $372 million.