South African consumers will be paying more for milk from May, due to the drought and milk supply shortages.
In Dundee, the price of two-litre plastic container of milk sells for anything from R19.99 to R21.99.
Dr Koos Coetzee, chief economist at the Milk Producers’ Organisation, said dairy farmers welcomed the increase. “Dairy producers need an increase in the producer price,” DrCoetzee said.
In comparison with steep increases in prices of commodities such as potatoes, fruit and vegetables, the price of milk has only increased by 0,6% year-on-year.
In a statement, said as a result of production shortages some dairy processors are already paying commercial farmers 60 cents more per litre for milk to ensure consistent supply in winter.
Poor pasture conditions caused by the drought and higher feed prices are putting farm profits under pressure. Paul Makube, senior agricultural economist at FNB, said the increase should reduce the cost-price squeeze faced by dairy producers.
However, Dr Coetzee said that some farmers have already suffered significant losses: “Unfortunately it might be too little too late for some.”
In January, milk production declined by 5% in comparison with the same time last year. In February production figures decreased by 3,7% compared to the same time last year.
The South African milk industry produces 2,82 billion litres of milk annually and generates R10,6 billion in turnover. Of South Africa’s 1 782 milk producers, only 280 are based in KwaZulu-Natal, and this number is declining. But these figures are deceiving.
Production in the province is increasing, with KwaZulu-Natal now producing nearly a quarter of the country’s dairy product. If this trend continues, the province will be the country’s major dairy provider within the next five years, says Edsel Hohls, SA Milk Producers’ Organisation (MPO) KZN chairperson.