One of the most frequently asked questions by milk producers is ‘ Why are imports not stopped by the MPO ?’ Before 1994 doing just this was as easy as a telephone call by the Milk Board to authorities to prevent dairy products from entering the country. This was possible since the Agricultural marketing Act regulated the import of dairy products through import control and the Milk Board had to approve the importation of dairy products. This situation changed after South Africa became a member of the World Trade Organisation and signed the General Agreement on Tariffs and Trade, 1994 (GATT). The most far-reaching consequence of this action by the South African government was the deregulation of the agricultural sector with the payment of import tariffs and compliance with health, quality and product specification requirements being virtually the only regulation applicable to imports.  The South African agricultural sector had to adapt swiftly to from an environment enjoying total protection from imports to a free market where imports are allowed to enter the country freely as long as the current import tariffs are paid.

The South African dairy industry operates entirely according to free market principles while the major role players on the international market, namely the USA and EU member states financially support their dairy industries  by way of direct and indirect subsidies. This means that our industry has to compete with imported dairy products of which the prices are low as a result of government intervention.

The MPO recognised the risks associated with the import of dairy products and developed an import risk management system which addresses legal imports, unfair competion and illegal imports. The South African Revenue Services (SARS) does not view the importation of dairy products as a high risk with regard to non-compliance and fraud.  This results in minimal fraudulent import transactions being uncovered and/or identified in the dairy sector. Resulting from the threat posed to the industry by illegal and sub-standard imports the MPO created the capacity to identify and address such imports by the establishment of the forensic investigation company Agri Inspec.  The company is responsible for identifying irregularities with regard to the import of dairy products and to take the necessary steps to address such irregularities.

Import statistics are used to identify risks with regard to individual import consignments on the following basis:

• An unexplained increase in the import of dairy products, classifiable under specific tariff subheadings;
• Consignments entering the country at abnormally low prices in comparison to international milk and dairy commodity prices and domestic prices; and
• Consignments entering South Africa from questionable sources, e.g. Singapore which does not have a dairy industry.

Agri inspec investigates identified import risks by taking the following actions:

• Detail analysis of samples of suspect products to determine compliance with South African requirements;
• Scrutinize import documentation for compliance;
• Visits to ports of entry and importers; and
• Compilation of report for submission to relevant authorities.

The MPO lodges formal complaints with representatives of countries from which low-priced import consignments originate and request meetings to discuss the relevant information and action steps to address the problem.
The MPO liaises on a continuous basis with the following government departments and other industry organisations on a high level (policy) as well as operational level in order to improve the support against dairy imports:

 
The MPO collects, collates and submits relevant international and local dairy market information, including imports, on a continuous basis to government. Furthermore, the relevant authorities are requested to act against importers not complying with SA legislation. Allegations against importers are substantiated by documentary evidence obtained by Agri Inspec.
The MPO identified a gap with regard to insufficient cooperation and coordination between the government agencies involved with customs services with regard to imported dairy products and consequently established the Dairy Classification and Technical Liaison Committee.  The Committee consists of representatives from various directorates within DAFF, the Department of Health, SARS, the Dairy Standards Agency, Agri Inspec and the Milk Producers’ Organisation. All issues relevant to the import and export of dairy products are discussed by the Committee and action steps are taken to address problems. This forum has proven extremely valuable in the MPO’s endeavour to manage the import of dairy products effectively and efficiently.