THE government is failing to release more than US$3,4 million collected through a mandatory 5% dairy import levy, plunging smallholder dairy farmers into financial distress and undermining efforts to revive Zimbabwe’s dairy sector, the businessdigest can reveal.
Introduced in 2022 and enacted into law in January 2023, the statutory levy imposes a 5% charge on the landed value of all imported dairy products, with proceeds earmarked for the Dairy Revitalisation Fund (DRF).
The fund was specifically designed to boost local milk production by supporting small-scale farmers, finance the importation of high-quality dairy heifers and sexed semen, and reduce dependence on foreign dairy imports, which have stifled domestic industry growth.
Official figures show Zimbabwe imported US$67,9 million worth of dairy products since the levy’s implementation, generating approximately US$3,395 million for the DRF. However, farmers say they have yet to receive any financial support from the fund, leaving them unable to improve herds or expand operations.
Deputy Agriculture minister Davis Marapira confirmed the delays, stating the ministry was in talks with the Treasury to expedite disbursement.
“Where 5% on imports is charged by our government for all dairy products and the Treasury is not releasing that money, we will fight with the Treasury to make sure that the dairy farmers benefit from that retention,” he said last week.
Livestock and Meat Advisory Council executive administrator Reneth Mano told the businessdigest that funds disbursements were overdue.
“However, it is our understanding that all the technical clarifications needed by the Treasury were addressed by the designated fund manager in 2024,” he said.
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“Hence, expectations are very high that the Treasury will soon confirm disbursement of the US$3,4 million so that planned investment activities for the smallholder dairy revitalisation programme may kick off in the second half of the fiscal year 2025,” he said.
Mano said the stakeholders in the dairy sector, the ministry, and the designated fund management institution set up the operational modalities in 2023, paving the way for the Ministry of Finance to start disbursement of the fund at the end of fiscal year 2023 or beginning of 2024 at the latest.
He said one of the goals of the fund is to enhance the competitiveness of the Zimbabwean dairy production sector.
He noted that small-scale dairy farmers under the Zimbabwe Association of Dairy Farmers (ZADF) were suffering productivity losses because of a combination of inferior genetics of their dairy cows and lack of capacity to produce quality feeds for their dairy animals at comparable low cost structures that we see in East and Central Africa.
“At current production costs, smallholder dairy farmers require producer prices of US$0,65 to US$0,75c to remain profitable as dairy farmers. And yet for Zimbabwe to become a regionally competitive producer of dairy products, local producer prices must fall towards the regional parity of US$0,35 to US$0,45 per litre,” he said.
“To achieve a 50% reduction in the cost of production, our smallholder farmers must embrace efficient on-farm production of silage and protein-rich leaf meal technologies that are widely used in East Africa.
“Financial resources needed to establish the seed banks and capacitate small-scale dairy farmers with on-farm production of well-known nitrogen-fixing agroforestry fodder trees and grasses are provided for under the terms of Statutory Levy and Dairy Revitalisation Fund.”
