A participant of a consultative meeting convened by the ministry last week said the federal minister presented a proposal to allow milk powder import quota on low duty structure to buyers of fresh milk from dairy farmers.
Most of the stakeholders opposed this move vehemently and said it would open a window of milk powder import in the absence of any regulatory framework and the ministry should not lend support to this move.
As per reports, Pakistan Dairy Association (PDA) pitched the proposal for inclusion in the Finance Bill 2018-19.
PDA recommended fixing an annual quota system for the imposition of regulatory duty (RD) on milk import. It proposed a reduced RD of five percent on milk imported under the quota, and an increased RD of 60 percent on non-quota milk imports.
According to the 1st level allocation, 80 percent quota should be for dairy buyers while 20 percent for non-dairy buyers.
Under the proposed 2nd level allocation, milk buyer quota (ie 80 percent) should be allocated on the number of milk collection centres by each company.
The proposal of the PDA was opposed by dairy stakeholders, who did not show flexibility on the issue.
They said sales of fresh milk were already on the decline due to low prices, therefore any move to increase imports of milk powder would not be entertained.
Most of the participants including dairy farmers and members of Corporate Dairy Farmers Association stressed for increasing RD on import of milk powder up to 100 percent.
When contacted, Sikandar Bosan admitted that the milk processing industry had presented a proposal for allowing milk powder import on very low duty structure while linking it with purchase of fresh milk.
He said such duty structures were already being implemented in Thailand and Indonesia, and added that the purpose of this suggestion was to give some concession to those players who were from the dairy processing sector.
“On the other hand, those players who are not part of the fresh milk chain, are being made to pay more duty on import of milk powder.”
He said he had visited Thailand some time back to witness the implementation of milk powder import formula that has been linked with the purchase of fresh milk.
He made it clear that his ministry had not yet take any decision on this matter, and the purpose of consulting with the stakeholders was to seek their view and create consensus.
Bosan said if the stakeholders agreed on the formula, only then would he recommend the formula to the government for implementation.
He clarified that his ministry would not give undue leverage to the dairy processors for importing milk powder in bulk, and sell to users like bakeries and confectioners, etc.
“We have yet not taken any decision on this important issue. I will also seek comments from FBR (Federal Board of Revenue) on this proposal in order to check fair implementation of this formula,” he added.
The minister admitted he was in favour of reintroduction of the dairy sector as “zero-rated” for sales tax as it was a financial burden that led to increased cost of production.
“I am in favour of increasing duty on import of dry milk and whey powder.
For the last three years, I have been raising this issue; and as you know last year duty was raised by this government following our efforts,” he added.
The ministry wants to increase duty on import of milk powder as much as possible even 80 to 100 percent from the present 45 percent so that dairy farmers could be given some relief on sale of fresh milk, he said.
By: Munawar Hasan
Source: THE NEWS INTERNATIONAL