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Rewa Dairy Ltd’s chief executive officer Ratu Savenaca Seniloli is urging government to adopt protectionist policies on Fiji’s dairy production industry in order to bring it to a comfortable sufficiency level.
He adds it would be unfair to expect the company to compete with importers of finished dairy products who are selling in the Fiji market, as Rewa Dairy is also involved in the development of the local dairy industry, heavily subsidising some dairy farm operations.
“Nearly 90 percent of our farmers are smallholders, subsistence to semi-commercial. The government sets up chilling centres, Rewa Dairy pays a contractor to pick up the milk can from farms, we chill that milk, we do the screening quality test before we bring it to the factory then we also have farming inputs that we take across to the chilling centres.
"Rewa Dairy absorbs all these costs and so, we are directly involved in the development of this industry. When farmers view that they don’t incur those costs, they can really develop and they can at least improve on their farming scales and become bigger, and then maybe they can start to absorb some costs,” Seniloli said in an interview with Fiji Liv.
“So that’s us taking part in the development of the industry. When you look at the developed countries, they came through this too but unfortunately when they are developed and all, they use the WTO regulations to try and grab into our market.
What I always say is allow us to develop, I mean, this is a basic food item, and it is an industry where there are still areas that we need to improve on, quantity, we need consistency.
"We are a small country, we are not even developed, and we’re trying to bring in all these government systems from developed economies - you look at America, they are heavily subsidising their farmers; the European Union are protecting their farms…here is a company 100 percent owned by farmers, what else do you want us to do?
"We’re helping communities out there, we’re not supporting any industries overseas, we want to build up our own industries so that it comes to a point where at least 50 percent of our milk is local. So we have been talking with government, what we’re asking government is to give Rewa Dairy the enabling environment in which it can allow us to absorb that cost of the activities upstream.
"But also put targets for Rewa Dairy and allowing Rewa Dairy to enjoy the concessions. This way, we can work towards self sufficiency,” Seniloli said.
His comments come in light of recent hikes in the retail prices of Rewa Dairy’s products, which Seniloli says is a result of higher import costs coupled with the company’s burden of subsidising costs for local farmers.
He called for quick action in the establishment of an enabling environment for local dairy production to flourish as this will mitigate the need for price increases in the future as heavy demand from China was also increasingly becoming an important factor that sidelined small importers such as Fiji.
“We faced this problem in 2007, where our suppliers in New Zealand and Australia were prioritising orders from China over us, and we were just a small importer in very miniscule quantity compared to China. So that demand was driving up prices for everybody and we suffered and had to go and look elsewhere for our raw materials. And even then, we didn’t have so many choices because we are limited in where we are allowed to source our raw materials from. Now, we would not have faced that problem if we were self sufficient,” Seniloli said.
Rewa Dairy’s heavy reliance on imports is reflected in its production statistics.
“In order to produce what we are producing here, we need 74 million litres of liquid milk a year. We only get 11 million litres from local sources and we import the rest from New Zealand and Australia.”
A bulk of that liquid milk is used for making butter while the rest are used to produce milk powder, Life liquid milk, yoghurt and cheese, Rewa Dairy’s main products.
Rewa Dairy’s only concession is that it is exempt from the 15 percent duty on imported raw materials.
