The sectoral organisation Milk Trade Round Table (Table Filière Lait, TFL/Ouaga) has just decided to raise the price of dairy products marketed in and around the capital. At this juncture I received a message from the organisation’s co-ordinator expressing the wish for a closer co-operation between us, in order to boost local milk production. Of this I am obviously in favour.

However, the condition must be that members of the Round Table of Ouagadougou (TFL/Ouaga) and in the first place its co-ordinator, understand the role of such a body.

As far as I know the term “table” is Canadian and refers to the fact that people sit down around a table to negotiate. Therefore the organisation is to be seen as a venue for negotiation and co-ordination, as its logo indicates. In other areas similar structures are referred to as for example  “Comité interprofessionnel du riz” (CIR-B), a joint committee for various categories of people working in the rice sector.

It is odd to note that in Burkina Faso such committees have been started before any support has been given to producers in order to allow them to set up their own organisation.

As regards rice, the CIR-B was launched before the UNPR-B (Union Nationale des Producteurs de Riz du Burkina) was set up. Even worse is that producers were given to understand that the CIR-B was there to help them, whilst in fact it is a negotiating body. How can one possibly imagine that big rice businesses, importing Thai rice at undercut prices will help Burkina rice growers to improve their situation, while their number one problem is precisely the cheap imports of old Thai rice at rates that do not even cover production costs?

It seems to me that there is a strong resemblance between the Sectoral Round Table for the Milk Trade and the joint sectoral committee for rice.

There are also the same ambiguities. Some try to have people believe that all groups of people working in the sector have the same interests. This is not true. The interests of someone who imports powder milk are not the same as a producer of local milk. The interests of someone who processes powder milk are not the same as those of a group of women who buy milk from owners of small herds and now turn out 50 litres of pasteurised milk a day.

What has happened?

To understand the present situation it is necessary to go back a few years. Local dairies were held at bay because of the massive imports of cut rate powder milk. At the time it was possible to buy powder milk for 200 CFA francs and mix it with water to obtain l litre of formula milk. But the going price for local milk in Ouagadougou was 300 francs/litre. Those who used powder milk were able to do nicely, especially since customs duties on the large 25kg bags were a mere 5% (when they entered the market legally …) It was impossible then for the two groups – powder milk versus local fresh milk traders – to negotiate. 

The solution could not come from a roundtable gathering. It would have been necessary to turn to the governments of the Economic and Monetary Union of West Africa or, at present, to the Economic Community of West African States, ECOWAS and demand protection for domestic milk (and thus also for dairies using it) by way of a 60%  duty on  powder milk imports. This measure has had some success in Kenya. Part of the income from such taxes could have made it possible to sustain domestic production of milk.

What happened next?

That which the roundtable/joint committee could not do – and that which ECOWAS governments would not do, is now about to be achieved by the world market! The price of powder milk is finally beginning to catch up and is now about to reach the level of its cost price. Local milk has thus become competitive!

Hence the powder milk group and the local milk camp have now been able to reach an agreement on raising prices on all dairy products, irrespective of their source. The initiative came from the “powder group” as I learnt from your letter of July 13th! Actually on the same day as the Union of mini-dairies and local producers was set up! That is not to say that the mini-dairies won’t follow suit. They need the higher price levels for their development.

What about tomorrow?

Small herd-owners and mini-dairies have now created their own organisation. They have realised that they must take the situation in their own hands to defend themselves. They declare themselves ready to do so. Including at the Round Table for the Milk Sector. They will go there, well aware that it is a negotiating forum and that all their demands might not be taken on board by the other side.

And after tomorrow?

If the price of powder milk continues to soar rapidly, businesses which sell formula milk products only (powder based) will probably  go bankrupt. They – and the ECOWAS governments – will have brought about their own failure.

At the present time cattle owners are not in a position to produce enough milk to fill the gap  after powder milk runs out. Things would have been different, if only a  CCT (Common External Customs Tariff) had been set that had been more supportive of domestic milk.

Compensate for powder milk imports by strongly boosting local production  is possible. But it requires a sound environment, in particular.

In my view milk producers ought to demand two things of ECOWAS governments:

1.  An end to the current anomaly: having different customs rates for powder milk, depending upon size – 25kg bags or small cans for family households. Everybody knows that the big bags are divided up and apportioned to be sold in the smaller packaging. Everybody also knows that it is these 25 kg bags that most harm local milk sales.

2.  A strong commitment from ECOWAS governments. They must undertake to protect the domestic milk trade by introducing a flexible protective import tax on powder milk, calculated in a way that would  ensure that, within the ECOWAS, the current price of powder milk remains stable, even if the world price should fall. It is only in this way that the necessary investments can be made.

Such demands are necessary, I believe, but cannot be carried by the Milk Sector Round Table of Ouagadougou.

They should be conveyed by the producers themselves (and local dairies) and put to the ECOWAS governments.

The Round Table remains a bargaining unit for its members, but it can not resolve all the problems faced by local milk producers.

Their major difficulties, highlighted above, are beyond its scope and cannot be taken on board by all.

It is up to the governments to take sides and decide if they wish to sacrifice their cattle farmers to favour powder milk import businesses. Herd owners must now defend themselves. And civil society organisations (including consumer associations) must understand where their long term interests lie.

Koudougou, August 20th 2007

Maurice Oudet

Director

SEDELAN