Pakistan importers await clarity on milk powder duty - Just Food
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Pakistan importers await clarity on milk powder duty

01 Jun 2017

Pakistan's milk powder importers have told just-food they are unclear whether the country's government will go ahead with budget plans to increase import duty on imported milk powder, opposing such a hike in principle.

Pakistan importers await clarity on milk powder duty

Pakistan’s milk powder importers have told just-food they are unclear whether the country’s government will go ahead with budget plans to increase import duty on imported milk powder, opposing such a hike in principle.

Concern has been raised proposals made in the Pakistan government’s federal budget for 2017-18, which included a plan to increase duties by 5% in some cases and 15% in others on 565 imported items. Media reports suggested the plans included milk powder but some importers have challenged the accuracy of such reports. Government officials have not replied to requests from just-food for clarification.

“So far, it’s not clear to what extent the government has increased RD [regulatory duty] on imports of dry milk, and we are awaiting a clarification from the Federal Board of Revenue,” Haroon Ager, a leading Karachi-based commodity importer and director of Ager International told just-food.

However, should duty on milk powder be raised by 15% from 45% to 60%, it would severely damage domestic demand by boosting prices by nearly 20%, with traders pushing a hike above the duty increase, Ager argued. “Since the government had raised RD on imported milk powder by 25 percent in the last budget, we will resist if it’s again increased.”

Ager predicted the Pakistan price of milk powder would jump from PKR352 (US$3.36) per kg to PKR422.

Furthermore, the price of some packaged milk manufactured by the local companies would rise where they used powder as an ingredient, Ager said, noting 60,000 tonnes of dry milk is imported legally each year into Pakistan.

There is also concern among traders a duty rise would boost smuggling, with more milk powder being smuggled into Pakistan than officially imported.