Transcript
BIMAN PRASAD: For many years the dairy industry struggled but it has gone into a more difficult situation. As soon as the sale of the Rewa Dairy company, which was owned fully by government and the farmers before, it is in a situation now where farmers are losing interest, where production has continued to decline and we are saying we need an urgent rehabilitation package to correct some of the disincentives and other support that is needed to bring that industry up to speed and to put it on a par so that we can increase our milk production here.
DON WISEMAN: Rewa Diary was sold to Fiji Dairy Limited, that's a privately-owned company, but they get major concessions through the decree that set it all up.
BP: The concession of zero duty to that particular company, in our view, gives no incentive to that company to promote local production of milk and that is why we are saying that the incentive structure that prevails at the moment doesn't do anything to improve milk production locally. What we are saying is that because that particular company has zero duty on the import of milk and cream from overseas, the milk price globally is very, very low, so the incentive for that company to continue to import as much as they can is always there given the world market price of milk. So why would that company do anything to promote local milk production? That is why we have called for a review of that decree or act which gives that kind of concession to that particular company and we believe on top of that the government needs to provide a comprehensive rehabilitation package to address many of the challenges such as diseases, pasture, control and improvements but more importantly the price that the farmers are getting now is not commensurate with the costs and therefore it is a disincentive for the farmers to continue to engage in dairy farming.
DW: As it exists at the moment, 1/12 of Fiji milk is locally produced. If we go back 10 years, what was that percentage like?
BP: In 2007 or 2008 we were producing around 11 million litres of milk. It is now down to about 8 million so there has been a big reduction and I think that trend will continue unless of course there is a big rehabilitation package put out by the government to provide incentives to the farmers to increase.
DW: Why was Fiji Dairy, as a private company, given this zero tariff concession?
BP: That is what we are questioning. That is what we do not understand and that is why we are asking government to review that decree, that act and that provision because we believe that that itself is a binding constraint and a binding problem for any other kind of solutions to improve their production because what happens is the prices that the farmers are getting now is very, very low. The farmers themselves have suggested a price of $1.25 a litre rather than less than a dollar they are getting now so for them the price incentive comes first. But with the price incentive there has to be other rehabilitation packages and other infrastructure improvements such as pop up facilities for transportation of milk so that quality doesn't get bad. So these are the areas, together with the price, that can help rehabilitate the dairy industry.
DW: Are you capable of producing all the milk you need in Fiji?
BP: Well, it is not something that can be done overnight and I don't envisage us producing all the milk that we need for consumption, at least in the foreseeable future, but I think that it is an important industry because it supports many farmers and given the decline in the sugar cane production and the decline of the agricultural sector as a whole in Fiji, it is very important for government to support this industry. Not only from the point of view of reducing imports, but also from the point of view of the fact it provides alternative livelihoods for many of the dairy farmers who in the absence of that support, may find themselves doing something which would be less in terms of the income potential. So the opportunity cost of neglecting the dairy industry in whatever form it is now is going to be huge and it could be quite detrimental to the whole agricultural sector as a whole.
