Milk battle

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http://www.ahram.org.eg/weekly/2000/504/ec3.htm

  Al-Ahram Weekly On-line
  19 - 25 October 2000
  Issue No. 504
  Published in Cairo by AL-AHRAM established in 1875


     Milk battle

     By Eman Youssef

In 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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PhD Student
Department of Political Science
SUNY at Albany
Nelson A. Rockefeller College
135 Western Ave.; Milne 102
Albany, NY 12222



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