Dairy products from Aust, New Zealand to become cheaper from Jan 1
Local dairy farmers warned to be ready as the price of imported milk products drops substantially thanks to zero tariff
The zero tariff on dairy products from Australia and New Zealand will take full effect on Wednesday after a 20-year-long transitional period, with the Cooperative Promotion Department (CPD) warning local dairy farmers and cooperatives to prepare for the potential impact.
CPD director-general Visit Srisuwan said the removal of tariffs could affect local dairy farmers, and urged them and their cooperatives to enhance milk quality and reduce production costs. He explained that such improvements were necessary for farmers to remain competitive against the expected surge of imported milk products from both countries, following the full implementation of the free trade agreement (FTA) contracts.
The Thailand-Australia FTA (TAFTA) was signed on July 5, 2004, initially reducing tariff to zero for 815 products from January 1, 2005. However, whole milk, butter and cheese were excluded from the agreement and subjected to a gradual reduction in tariffs over a 20-year period, which will culminate in a zero tariff by January 1, 2025.
Thailand’s FTA with New Zealand, signed in April 2005, similarly phased in tariff reductions, with zero tariffs on 1,088 products, excluding raw cow milk, skimmed milk powder, dairy drinks and UHT milk to allow time for Thai farmers to adjust.
Visit urged dairy cooperatives to help their members to reduce the cost of dairy farming, particularly the cost of feed. He suggested that farmers focus on using grass, hay and corn stems in the right proportions to lower the cost of feed pellets.
Cooperatives should also provide guidance on the use of technology to improve milk quality.
With enough knowledge and technology, Visit said, farmers should be able to produce at least 15 kilograms of raw milk per cow daily. The CPD is ready to allocate soft loans to dairy cooperatives to support the improvement of product quality, he said.
In the first 10 months of this year, Thailand exported US$603.6 million (20.66 billion baht) worth of dairy products, marking an increase of 11.3% from the same period last year.
Thailand is the No 1 exporter of dairy products in ASEAN and the seventh largest globally.
Visit also noted that imports of dairy products from Australia and New Zealand have risen steadily since 2017. Thailand imported 6,835 tonnes of dairy products in 2017, rising to 8,151 tonnes in 2018, 13,544 tonnes in 2019 and 39,415 tonnes in 2020.
