Insight Focus
The Ministry of Commerce is considering a draft policy to cut the dairy import tax to 0%. This could impact local farmers. Feedback is being gathered from stakeholders and a final decision will follow.
Regulatory Changes on Tax Exemption for AUS/NZ Dairy Import
The Ministry of Commerce (MOC) is considering a draft policy to lower the import tax on dairy products to 0%. This policy links to the international trade agreement Thailand-Australia Free Trade Agreement (TAFTA) for import quota taxation and Thailand-New Zealand Closer Economic Partnership (TNZCEP) specifically targeting dairy products like milk, cream, including skimmed milk powder.
Thai policy was planned to be effective from January 1, 2025 onward but, it is still in is draft form and has not yet been officially approved. This means it could still undergo revision or might be delayed before implementation.
Import Parity Matters
If this policy is implemented, it could potentially increase import volumes, which might affect local dairy farmers. The influx of cheaper import products could create a competitive pressure on the local dairy producers.
Not only are dairy products from Australia and New Zealand cheaper than Thai products, but they are also considered as being some of the highest quality origins.
Already in 2022 and 2023, both the volume and value of dairy imports into Thailand have increased.
Source: Dairy Farming Promotion Organization of Thailand
Impact on Local Farmers
Dairy farming employs about 5,000 people in Thailand, although this number has been declining since 2021.
Source: Dairy Farming Promotion Organization of Thailand
Before 2021, the farming industry in Thailand comfortably supplied the country’s demand. But since then, production has declined, while consumption increased.
Source: Dairy Farming Promotion Organization of Thailand
In late 2020, Thailand’s dairy industry – like many others — was challenged by Covid-19. By 2021, dairy farmers were battling rising production costs due to inflation, labour shortages, substandard milk quality and increasing prevalence of conditions such as mastitis in their dairy herd. There have also been intermittent outbreaks of foot-and-mouth disease. These were all factors leading to a decline in milk production.
MOC Seeks Feedback on Dairy Import Policy
The Ministry of Commerce is gathering the feedback from various stakeholders including the farmers, industry representatives, traders, logistic providers and banks etc. It has issued a questionnaire to gather this input which is available online on the department of foreign trade website.
This feedback period started on August 20 and lasted until September 3. After collecting feedback, the MOC will review and decide whether to approve the policy as is, make changes or reject it. An official decision is expected to follow in a few weeks.
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