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Dairy Board draws Lasco flak
Bill said ill-conceived, could drive away firms
balford henry, Observer writer
Friday, March 17, 2006
Local consumer products giant Lasco yesterday joined growing opposition to the creation of a statutory authority that will oversee the development of dairy policy, describing the proposed Jamaica Dairy Development Board (JDDB) as a threat to competition.
"The establishment of a body, such as proposed in the bill will erode the efforts government has taken to improve the competitiveness of Jamaican industries through liberalisation," Lasco's group managing director Patrick Lawrence said in a submission at Gordon House to a joint select committee looking at the bill providing for the creation of the JDDB.
In a scathing attack on the proposals, Lawrence described the bill as ill-conceived, a threat to the public and an obstruction to an efficient dairy industry.
He said that the bill included measures which could easily prompt dairy processing companies to migrate to other parts of the Caribbean, "where they would be able to export duty free to Jamaica".
But minister of agriculture Roger Clarke, who is chairing the joint select committee, said that it was unfair competition from dairy imports, including skimmed milk, that has driven the local farmers out of business. He said that the government was trying to create a level playing field through the creation of the JDDB.
"The industry was moving along nicely and was producing until it reached its zenith of 38 million litres," Clarke said. "But, because of the importation of milk powder without any regulatory body to control it, it fell on hard times."
Lasco, which started out marketing its brand of packaged milk powder, has since expanded into other areas of consumer products ranging from soy protein food drinks to pharmaceuticals.
Lasco's disapproval of the proposals to create the JDDB is the latest in a number of objections raised by sections of the industry, as well as the National Consumers League, to various aspects of the bill.
Both Nestlé Jamaica and the Jamaica Livestock Association (JLA) have objected to the board being authorised to determine farm gate prices for milk, as proposed in the bill. Nestlé said that the proposal "sounds like price control at the farm gate".
At the last meeting of the board on March 2, the National Consumers League suggested that the government should withhold financial support for the industry, since processed milk products have now been linked to a variety of health problems.
The bill being reviewed by the committee seeks to create a statutory authority, the JDDB, which, subject to the general direction of the minister of agriculture, will have responsibility for the development of dairy policy and co-ordinate government's milk production enhancement.
Lasco also criticised the proposed cess, which the board will be able to impose on the trade and which will be a major source of its financing.
"We at Lasco are opposed to any cess on the industry, as this would mean additional input costs and the erosion of the already slim margin the company earns from the sale of its products," Lasco said.
Lasco said it is already paying a 50 per cent duty on the importation of milk powder and applies a mark-up of 10.3 per cent.
"Anything more would make the product unmarketable and remove it from the hands of the people who need it most," the submission added.
Explaining the threat that the cess could create for the local economy, Lasco pointed out that currently it employs 350 persons and supports 3,000 retailers across Jamaica's 14 parishes, excluding "haulage contractors and their sidemen", and is a consistent supporter of schools and community feeding programmes.
The company noted that a dairy committee, comprised of key players in the industry, was already active at the Trade Board.
"Rather than reinvent the wheel, prudence dictates that the dairy committee and the Trade Board inspectors be financially supported to boost the inspectorate service rather than establish a full board to do this," the company suggested.
"In today's fast changing world, competition and market forces must be allowed to drive business. Companies must assess their operations and decide when to retool and change to more efficient machinery and methods," Lasco said. "The way forward must be on the basis of strict business operating practices, rather than on the guise of government protection and subsidy."
Dairy Board draws Lasco flak