Milk Processing Sector Described As Oligopoly

SOUTH AFRICA - A government report on food prices has described the milk processing market as an oligopoly, saying four dairy firms process between 74 percent and 78 percent of delivered milk.
calendar icon 13 August 2007
clock icon 1 minute read
Oligopoly is a market condition that exists when there are few sellers and, as a result, they can greatly influence price and other market factors.

The Food Cost Review 2006, published by the National Agricultural Marketing Council (NAMC) and the department of agriculture, comes at a time when the competition authorities are investigating anti-competitive behaviour by major dairy companies.

The NAMC's Johann Kirsten said on Friday that the four dominant processors were Clover, Parmalat, DairyBelle and Woodlands Dairy. By way of contrast, the review said the dairy farming sector "existed at near perfect competition", resulting in farmers being "largely price takers" and "subject to a perpetual cost price squeeze".

The review quotes Milk Producers' Organisation figures that claim that 285 dairy farmers left the industry between January 2006 and January 2007 to leave behind a total of 3 899.

Source: Business Report
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