The Milk Producers Organisation (MPO) said it anticipated a 15% increase in the retail price for milk, but this would not necessarily result in reduced consumption.
“Consumers see milk as a basic necessity, so while the volumes of milk being sold won’t decrease, consumers will have to cut down on other groceries to be able to afford the staple foods. We definitely anticipate high food inflation as a result of the weakening rand,” said Bertus de Jongh, MPO CEO.
The prevailing drought in New Zealand has also placed pressure on milk supply, resulting in a further increase in the international milk price.
Dr Koos Coetzee, senior economist at the MPO, said higher producer prices in countries like New Zealand were thought to increase production, but this had not happened. Instead, prices increased further amid lower supply. “Damage caused by low milk producer prices has now resulted in a low supply. The drought has also placed pressure on prices.”