Looking after No. 1

26 July 2013
Author  

HAVE a heart for our poor dairy farmers. The last remaining independent dairies around the country have closed down one by one until there are now none left. However, nostalgia will not ease the plight of our dairy farmers and we need to approach this problem in a hard headed and realistic manner.

The reasons behind the problems of the industry are manifold and quite complex.

The difficulties the industry faces are not very different from those the poultry, beef, clothing and textile industries and many other economic sectors in the country face.

Mind you, the South African dairy industry has its own share of problems, with many farmers exiting the industry because of low profitability and high input costs.

Here we complain about high the high cost of dairy products and the fact that producers charge us more for locally produced chicken than poultry products imported from South Africa.

Superficially, the idea of not producing certain products ourselves and just importing everything from somewhere else at lower prices sounds seductive.

However, do we really want to contemplate a future without Namibia Dairies and the loss of 1,500 jobs, or the recently established Namibia Poultry Industries with another untold number of jobs down the tubes?

No one stops to ask how we would pay for these imports if we do not have the money to pay for them if we do not produce anything.

The laws of economics dictate that countries should concentrate on manufacturing those products where they have a comparative advantage because of lower marginal and opportunity cost.

Countries and regions have a comparative advantage in different products because of an abundance or proximity of the required raw materials, trained workforce, accessible market and economies of scale among other factors.

However, what happens with a country like Namibia, which has the curse that it does not really have a comparative advantage in the production of hardly anything.

Well, we have a comparative advantage in fisheries because of the rich blessings of the Benguela current.

Although even this is relative, because many other countries e.g. Argentina can produce seafood products at lower marginal cost and therefore more efficiently than we can.

The comparative advantages we enjoy in beef production and mining minerals such as uranium remain precarious at best.

Some argue that we have a comparative advantage in tourism and we should therefore concentrate our efforts in that sector.

So what does a country do when faced with this type of situation? Does it throw in the towel and abandon any efforts to develop other forms of economic activity.

Should we all dress up in omutjira and become curiosities for western tourists to come and ogle.

Obviously not, and the fact remains that those industries where we have a comparative advantage are too few to provide the people of this country with an adequate living.

What economists do not tell us is that economic success largely depends on defying, overcoming or subverting the laws of economics, or just outright cheating and lying when it comes to trade rules.

How else do you explain the fact that the United States is the world’s second largest cotton producer even though it does not have a comparative advantage in cotton production?

Government subsidies amounting to 30 percent of the cost of production, is your answer!

No country worth its salt, or one that cares about the welfare of its people, does not produce its own milk or chicken.

It’s crazy that we are even debating this issue. The Government should immediately take whatever steps necessary to protect Namibia Dairies, Namibia Poultry Industries and Meatco from destructive foreign competition.

It’s obvious that our local companies will never compete on an equal footing with companies from South Africa, with its 51.4 million strong population and huge industrial base.

We could have avoided many of these problems if we had placed a stronger emphasis on developing our agricultural base after independence. If we had done this, not only Namibia dairies, NPI and Meatco but also many other industries would now enjoy lower feed input costs. It is unlikely that the pseudo-socialist Green Scheme experiments will blaze the trail to the future of Namibian agriculture.

Government needs to open up agriculture in the fertile north-eastern regions to private capital and the efficiencies of the market (i.e. domestic market).

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The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

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