GOVERNMENT is looking to impose a trade policy designed to protect the local dairy industry.

It’s a critical element of a five-year programme, spearheaded by Agriculture Minister Dr Christopher Tufton, to turn around the ailing sector, which has seen production decline by more than 50 per cent over the last 18 years. Chairman of the Jamaica Dairy Development Board Dr David Lowe said a move towards a more protective trade policy will help stabilise the local dairy sector, the short-term mandate of the board.

“Since the board was formed last year, we’ve put together a broad strategic plan as to how we want to approach this difficult challenge,” Lowe told reporters and editors at the weekly Monday Exchange meeting at the Observer’s Beechwood Avenue headquarters in Kingston.

“What we’ve done is taken a multi-phased approach to how we are going to address this challenge… we have to stabalise the local environment and one of the ways we are going to do that is through the strengthening of extension officers, but more importantly, we will look at the trade policy and see how we can make sure to create parameters that will level the playing field, not immediately, but over time,” said Lowe, who was part of a team of agriculture ministry executives at the meeting.

Jamaica produced just under 40 million litres of milk in 1992, representing about 24 per cent of local consumption. But liberalisation trade policies caused the market to become flooded with cheaper imported dairy, especially heavily subsidised milk coming out of Europe. The upshot is that this squeezed local production, which fell to 13 million litres in 2008 — just under 10 per cent of local consumption.

“The dairy industry is a very classic case of how we’ve managed liberalisation to our own detriment,” said Tufton, noting that imported milk is no longer cheap, but Jamaicans are forced to consume it because of a lack of local alternatives.

“The dairy market is one of the most protected markets in Europe… they took inventory and stockpiled it, and when they could no longer manage the stockpile, they released excess inventory at prices less than cost of production on the world market, where countries like Jamaica absorbed it,” said Tufton. “What happened was that after we benefited from that in terms of prices, Europe started changing their policies and what essentially happened was that they discouraged export support and the prices jumped.”

Tufton’s assessment is supported by statistics showing that milk imported from Europe has increased by almost 70 per cent over the last 11 years. According to the Jamaica Dairy Development Board, imported skim milk powder and whole milk powder from Europe cost US$1,400 and US$1,750 per metric tonne respectively in 1998. In 2009, skim milk powder from Europe was US$2,325 per metric tonne and whole milk powder was US$2,600 per metric tonne.

“So, from a food security perspective, it is critical that we at least have a percentage of the dairy requirements for our own consumption at least,” added the agriculture minister, saying that the aim is for the local dairy sector to supply at least 50 per cent of local consumption.

Lowe said that the board is also looking at ways to make dairy farmers more efficient, which is key to strengthening the local industry.

“We know that protecting any market is always going to be a challenge because we have to recognise that efficiency has to be the critical order of the day,” he said. “We know that we are not going to get to a level of efficiency across the board for the majority of our farmers in year one or year two, but over time.

“So, we want to make sure that we create business plans to see how we can create models or mother and satellite farms that can create greater participation of smaller farmers but also encourage large-scale players to get involved,” added Lowe, who cited the revival of the Dominican Republic’s dairy sector as a case study Jamaica could emulate.

Dominican Republic once faced much of the same problems Jamaica faces today. Domestic dairy demand doubled in that Caribbean country during the 1990s, but local production became crippled due to competition from imported powdered milk. According to the Dominican Today, data from the country’s agriculture ministry revealed 80 per cent of the milk the population consumes today is produced in the country. Agriculture Technical Adviser Manuel González said government incentives and a good climate spurred the dairies to increase their efforts so the country becomes self-sufficient in terms of milk.

A major obstacle which Jamaica faces in its dairy reform programme, however, is the fact that one of the larger dairy farmers, Windalco, is encountering difficulties which has threatened Government targets. Windalco is the second-largest producer of milk in Jamaica behind Serge Island, but its farming operations — a minor source of revenue — has been affected because of the fallout in its alumina business — its major source of revenue.

“It is something we are discussing with Windalco because they produce about 24 per cent of our local milk production,” said Agriculture Minister Tufton, adding that “they are having difficulties and there are signs that the dairy stock requires better attention.”

Jamaica’s largest dairy farm, Serge Island, is on over 2,000 acres of land in St Thomas. Seprod, which bought the complex in 2005, has since then invested heavily in its modernisation and redevelopment. Serge Island is part of Seprod’s manufacturing division, which contributed $1.3 billion in operating profits to the group over the financial year ending December 31, 2009.