In June, 2017, the Malawi Government announced the removal of the VAT tax on fresh liquid milk. This has long been a contentious issue for the Malawi Milk Producers Association, and they are extremely grateful to the government for this move.
In a country where 48 % of the children under 5 are stunted in their development according to a UN report, this is a very welcome move. Milk and milk products are an essential part of a healthy diet and the availability of these products should be widely supported to improve nutritional imbalances’ in the diet of many Malawian children. This move by the Hon Minister will lower the price of milk at the consumer level, which had risen by over 35% in the past 5 months alone. It also is of great importance for the Dairy Producers in Malawi, as this announcement has the potential to increase the consumption of milk and milk products in the country and an opportunity for the producers to produce more milk available to the public. This in turn will mean more income for the producers as well providing employment in dairy the dairy sector. It is our hope that milk processors will quickly respond favorably by adjusting the milk price upwards at farm gate from the current K150.00/liter.
This gesture will bring back the farmers who had ceased bringing their milk to the bulking group. However we would like to urge the government to take this one step further, by also removing the VAT and Import duty on dairy equipment and dairy input supplies coming into the country. These taxes are for the most part responsible for the increase in the cost of production of a liter of milk at the producer’s level.
Dairy equipment such as milking pails, milk churns and milk cooling tanks are not produced in Malawi and all have to be imported from other countries. This is the same for Artificial breeding supplies and animal health products. These products and equipment are an absolute necessity for the farmers to be able to produce more high quality milk that is safe for consumption. By removing these taxes as well, the price of milk could be stabilized and farmers would not be forced to increase their price of milk at the farm gate.
At the moment they are receiving a price that is below their own cost of production, which is threatening their future survival.
