Dairy Turns Sour For SA’s Small Farmers

SOUTH AFRICA - THE survival of small and medium-sized dairy farmers could be at risk as input costs rocket and the selling price of milk at the farm gate fails to keep pace, say economists.
calendar icon 9 May 2007
clock icon 2 minute read
SA’s milk shortage, which hit the market about two months ago and is expected to last until November, is likely to see consumers paying more for milk.

The shortage has been attributed to lower rainfall than usual, placing pressure on farmers to use alternative sources of feed, prices of which have doubled in the past year.

An international shortage is also placing pressure on SA’s ability to import milk, and retailers and dairy processors have been accused of keeping farmers’ prices down, placing small farmers in jeopardy.

Milk Producers Organisation (MPO) MD Etienne Terre’Blanche said retailers were putting pressure on dairy processors to keep milk prices down.

The cost of producing milk, about R1,80/l, and high input costs made it unviable for small farmers to continue.

He said farmers producing less than about 30l a day with herds of fewer than 100 cattle were economically unviable under today’s conditions.

However, he was confident that increasing prices could ease the situation.

In December, the Competition Commission referred eight dairy processors to the Competition Tribunal after it had found evidence of price-fixing for raw and retail milk.

MPO economist Koos Coetzee said milk farmers had been leaving the industry at a rate of 30 a month for the past few years and now there were 3700 producers.

“The cost (of producing milk) is squeezing out the smaller farmers.”

Source: Business Day
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