Development & Aid, Economy & Trade, Headlines, Latin America & the Caribbean

GLOBALISATION: Dairy Farmers Pit ‘Jamaica Hope’ Against Subsidies

Zadie Neufville

ST. CATHERINE, Jamaica, Mar 17 2004 (IPS) - Aubrey Taylor’s dairy farm has made him all-island Champion Farmer many years running, but these days he struggles to stay in business.

“I just lodged my milk cheque and it’s not enough to cover the cost of my operations,” he tells IPS.

But unlike many of his friends, Taylor vows to remain in dairy farming despite a significant drop in production levels, the price he gets for his milk and the declining condition of his pastures.

Across the island the picture is repeated several times over as falling milk prices and demand force dairy farmers out of business. They say they are unable to compete with subsidised milk imports from the European Union (EU).

An immediate past president of the Jamaican Dairy Farmers Federation (JDFF), Taylor says the subsidies allow European farmers to produce milk at half the cost of their Jamaican counterparts.

At 1,420 U.S. dollars a tonne, manufacturers here find it cheaper to import milk powder than to buy fresh milk from local farmers, says the federation, dismissing claims that Jamaican producers cannot competitively meet demand.

What local farmers need, they say, is a level playing field, and the advantage of this country’s world famous tropical cattle breed, the Jamaica Hope.

More than 50 years ago, Jamaican Scientist Thomas Lecky developed the Jamaica Hope, the last breed of tropical dairy cattle. A combination of the British Jersey cow (small and light feeding), the Holstein (heavy milk producers) and the Indian Sahiwal breed (disease resistant and adapted to the tropics) the Hope produces an average 12 litres of milk a day, 3 times that produced by other cattle on the island.

According to Taylor, the milk imports have also led to economic and social decline in rural communities.

Some farmers, like Donny Bunting, have simply packed up, driven out of business by the difficult conditions.

In 1993, at age 36, Bunting was one of the largest dairy farmers on the island, with more than 400 heads of cattle. These days his pastures are overgrown and the once pristine diary equipment rusts in the sunshine, choked by weeds. Bunting is now a fish farmer.

“We actually got very good production levels but after many years of stressful efforts to increase our production and doing so successfully we were still not able to compete with the milk powder,” he said in an interview.

The Catholic Agency for Overseas Development (CAFOD) reported in 2002, that the EU, which provided 67 per cent of Jamaica’s milk powder imports in 2000, is “the most heavily supported agricultural regime in the world”.

The EU spends more than 4.9 million U.S. dollars each year subsidising milk powder to Jamaica alone, added CAID. This is more than 166 times the island’s entire 2003-4 agriculture budget.

According to a documentary by the Television Trust for the Environment (TVE), titled ‘When the Cows Come’, the EU spends 16 billion dollars a year subsidising its dairy industry.

In the film, World Bank President James Wolfensohn says his organisation will have to address issues of economic liberalisation of the kind that permitted the export of subsidised EU dairy products, if development is to take occur in places like Jamaica.

In the last 10 years, Jamaican farmers have seen their market share for local milk slip from 24 percent to 4.2 per cent.

Between 2000 and 2002 alone, production of liquid milk fell 35 per cent, from 27.5 million litres in 1999 to 20.5 million litres in 2002.

Nestle Jamaica, a subsidiary of the multinational and a traditional, major purchaser of fresh milk, has steadily reduced its local buying, while increasing its imports of milk solids.

“The price of locally produced fresh milk is excessively high and does not allow” the company to be competitive in the marketplace, Nestle told a local newspaper.

In January 2002 the farm-gate price for milk fell from 0.30 U.S. dollars a litre, to 0.24 dollars. At the same time, Nestle disbanded its milk collection routes, forcing farmers to deliver milk to collection centres at their own expense. A package of milk powder that makes one litre of milk sells for 0.25 dollars.

But rather than giving up faced with such facts and figures, many farmers like Taylor are looking to the Jamaica Hope as an advantage that will permit them to compete with imported milk powder.

Unlike Holsteins, the smaller Hope is able to withstand the difficult foraging conditions on the island. The animals can feed on marginal pasturelands in hot, humid conditions while producing “a fair quantity of milk”, said Dr. Byron Lawrence, head of the Jamaica Hope Breeding Programme.

It is this fact, Taylor notes, that gives the dairy industry reason to hope.

According to the 56-year old, the industry is also plagued by high feed costs and poor pastures. While many farmers have culled or dried-out their herds, the neglect of pastureland will affect future production.

Taylor is also leading the JDFF’s quest to seek new ways to protect the local markets, while keeping manufacturers in business. For example, farmers want government to cap milk imports by the manufacturing sector, and apply a 100-per-cent duty on amounts that exceed the limit.

When Jamaica liberalised its trading markets, it was forced to remove support for vulnerable industries like dairy, which had been subsidised from the sale of Lada motorcars, sugar and other products acquired by government under various multilateral agreements.

The government has taken many initiatives since then but has failed to rescue the dairy industry. In 1996, it levied import tariffs of 30-40 per cent on milk imports, which allowed a brief period of recovery and a hike in production to 28 million litres by 1999. But in 2002, production fell to 20.4 million litres.

The tariffs failed to work, Taylor explains, because of a loophole that allowed importers to take advantage of the five-per-cent duty on milk imports given manufacturers.

According to Taylor, the country’s poorest farmers are hardest hit by the decline. In the past five years, production from the smallest farmers, most of whom own fewer than 10 milking cows, dwindled from 2.5 million litres to just over 300,000 litres.

In the last 20 years, farming officials say, the number of dairy farmers has dropped from more than 4,000 to just over 100.

Farmers like Orel Rayson, who started his operation with one cow and increased his milking herd to 17, hardly feels the satisfaction of his achievement these days.

“I used to milk with my hand. I got to milk 17 with my hands, twice a day… it was so nice. And while (milking) I was praying that I could sell a hundred litres of milk,” he says in the TVE documentary.

Today Rayson sells more than 2,000 litres a fortnight, but barely makes enough to pay his farmhand.

“Now I cannot buy gas for the vehicle,” he says. Rayson now kills calves because he cannot afford to feed them and no one will take them, even for free.

Local farmers case against dumped whole milk powder was upheld by a government-appointed anti-dumping committee, which in 1995 recommended the imposition of a countervailing duty of 137.5 per cent.

A study carried out by international accounting firm KPMG for the Jamaican Anti-Dumping Advisory Board concluded that the EU and United States were dumping milk products on the Jamaican market.

Government refused to implement the recommendations because it feared retaliation by the two world giants, says Taylor.

“The rejection of this proposal has been directly responsible for the continuing precipitous decline in the fortunes of local dairy farmers”, he adds.

Taylor believes government lacks the political will to confront international lending agencies, and to implement the World Trade Organisation’s special safeguard provision of the Agreement on Agriculture, which is designed as an easy way for developing countries to protect themselves from dumping.

Many here believe government’s hands are tied by the conditions imposed by loans from the International Monetary Fund (IMF) and World Bank, and by the country’s dependence on banana and sugar export quotas provided by the EU.

In the documentary, Wolfensohn admits the World Bank must accept some blame for the demise of local industries, after it encouraged developing countries to open up their markets to unfair competition.

In February the bank reported a “crucial need for poverty reduction programmes” in Jamaica, and in response to the failed global trade talks in Cancun, Mexico last September, the EU has begun overhauling its subsidies policy.

Those developments have given new optimism to the JDFF and Jamaican Agriculture Minister Roger Clarke. In a review of 2003, Clarke was confident that efforts to rehabilitate the dairy industry would bear fruit.

Last year, a multi-million-dollar milk processing plant, a joint project of the JDFF and the government, began operation. Government is also now buying large quantities milk for its school feeding programme.

The federation is also hoping authorities will provide grants to upgrade pastures and help many farmers to build back their business.

“I won’t give up. Like the beef industry, milk will make a comeback and I will be here”, Taylor says optimistically.