Every year, the month of June is celebrated as “Milk Month” globally – a month that promotes the health benefits of milk consumption, and also provides an opportunity to acknowledge those that produce milk and other dairy products. It is a harsh reality that operating in the dairy industry is tough – a reality which Namibia Dairies, a subsidiary of the Ohlthaver & List (O&L) Group, knows all too well. Having faced turbulent times before, external pressures have finally brought the company to a turning point aimed at sustaining the future of Namibia Dairies.
Pieter van Wyk, Technical Head at Namibia Dairies: “Since its infant industry protection was phased out over a decade ago, the local dairy industry has been vulnerable to dairy products imported from other countries, particularly South Africa. Local industry players struggle to compete with these cheaper imports from markets with lower input costs and larger economies of scale. The local dairy industry is further disadvantaged by the value-added tax (VAT) that must be paid on Ultra-High Temperature (UHT) milk sold in Namibia, as well as by unfavorable exchange rates when importing specialized supplies.”
The drought experienced by Namibia in recent years has also exacerbated the strain on the country’s dairy industry, as evidenced by farmers who have already had to exit the sector. With the Hardap Dam running exceptionally low last year, there was a shortage of fodder, its price surged and farmers had to resort to importing fodder. The good rains received this year may have provided minor relief for some extensive farmers with smaller outputs, but the same cannot be said for players in larger, intensive farming activities, such as at the !Aimab Superfarm where most of the Dairies’ milk is sourced.
Van Wyk explains: “The exiting of farmers and the overall reduction in milk production have resulted in the current shortage of UHT milk produced in the country, which is set to further decrease. Currently, Namibia Dairies has been receiving about 800, 000 liters less of raw milk per month from its farms than it did two years ago.” He further stressed that this decreased supply was recently met with an increased demand for UHT and extended-life products compared to fresh products owing to the COVID-19 pandemic. Consumers have been frequenting shops less often and needed products that would last longer on their shelves. To sustain the company, Namibia Dairies has had to adapt to the sudden change in consumer demand. Change is what is required to secure a future for the local dairy industry. However, no matter how bleak these market conditions seem, Namibia Dairies is far from raising the white flag. This necessity for change is, in fact, being embraced by Namibia’s dairy industry as an opportunity for transformation. Said van Wyk: “Thanks to our loyal consumers and everyone else who contributes to this industry, there is still a future for dairy in Namibia.”
Namibia Dairies is proactively reimagining its offerings and operations and its portfolio of products will be expanded and diversified. The company’s willingness to seek new possibilities speaks of its dedication to the O&L Group Purpose “Creating a future, enhancing life”. Even in these uncertain times, Namibia Dairies has championed the Vision of the O&L Group, that is, to be a catalyst for positive change, creating new realities and fulfilling dreams. The company remains committed to providing the country with its Nammilk brand, but in the future, Namibia Dairies will be pushing the boundaries beyond its current dairy and non-dairy offerings. Economies of scale and potential markets will have to be assessed to determine the feasibility of any new offerings to complement the existing product mix.
The company has the largest cold chain distribution network in Namibia, connecting it to local depots across the country. According to Van Wyk, Namibia Dairies will look different in the near future and while it will continue to leverage its strengths such as distribution and its reputation for quality products, change and innovation are required in order to enhance sustainability while continuing to provide our consumers with trusted quality products.