By Ayanna Kirton, Staff Reporter 
Ramsay
WHEN SERGE Island Dairy began operations in 1985, milk and milk-based products were the company's major sources of revenue. However, almost 10 years later, Albert Ramsay, Serge Island's managing director, says sales of the company's milk products have fallen flat, forcing the company to rely on non-milk products and contract packaging to keep revenues up.
"There has been a fall off in milk consumption worldwide, and in Jamaica the consumption of fresh milk has been replaced with cheaper milk substitutes," says Ramsay. "The most threatening fresh milk substitute is powdered milk. It is imported to Jamaica in volumes, and because of the total liberalisation of the economy, tariffs imposed on suppliers of powdered milk are minimal.
"Very little has been done to protect the industry. In islands like Barbados and Trinidad import taxes levied on imported milk products are as high as 200 per cent, but in Jamaica the tariff is only 20 per cent."
RECOMMENDATION
According to Ramsay, the company, along with other players in the dairy industry, approached the Anti-Dumping Committee with a recommendation to increase the current tariff to 137 per cent. However, this recommendation has yet to be implemented. Now, as a result of stiff competition from milk powder suppliers, the cost of fresh milk has been reduced considerably and has caused many farmers to opt out of the dairy industry because of its lack of profitability.
Fortunately for Serge Island, it has managed to weather threats to the industry. The company enjoys a significant portion of the market share of milk suppliers (approximately 40 per cent), it also exports throughout CARICOM, earning a total of $11.8 million in export sales last year, and has diversified its portfolio of products and services, adding flavoured milk and juices to the list as well as UHT contract packaging for regional and international producers of flavoured milk and non-milk products. These new additions have contributed to the 17 per cent growth in sales for the financial year ending March 2004. The company will also look to grass production as a way to reduce the costs associated with importing forage for livestock. "We have reduced our dependency on imported grain so we are turning to hay which will be produced locally," he says.
As one of the major manufacturers and users of UHT packaging, Ramsay says the company has been able to extend the shelf life of its products. UHT packaged milk products last up to nine months while juices have a longer life of one year.
INCREASING PRODUCTION
Currently operating at a capacity of 50 per cent, Ramsay says Serge Island is finding ways to increase production at its UHT packaging plant in order to maximise the return on the investment in the technology. In addition to milk powder imports, Ramsay says the heavy marketing of juices and sodas to school-aged children can also be attributed to the current downturn in the consumption of Serge Island's milk products. However, he is optimistic that things will turn around.
"There is a place for fresh milk among school children. Producing flavoured milk and other value added products will appeal to them and marketing activities such as the sponsorship of sporting events as well as the school feeding programme will enable us to target kids, who are the leading consumers of milk."
For the long term, however, Ramsay says the local dairy industry cannot be revived without the help of the local authorities. This can only be achieved by consistent lobbying of the Government to take the necessary steps to amend the prevailing duty structure on imported milk powder which is heavily subsidised by the governments of the countries in which these products are manufactured.
"I don't think much thought has been given to the bigger picture," he says. "We are killing off our own industry and it can come back to haunt us in the future." says Ramsay. "We are not asking for much, just a level playing field so that all players have an equal shot at success."
EDITOR'S NOTE
This story was first published in Friday's Financial Gleaner with an incorrect headline. We regret the error.
