Price increases leave dairy producers wanting

Dairy farmers have been offered a measure of price relief, with Clover increasing its producer price of milk on 1 March and Parmalat offering an increase to producers in cheese production areas.

However, farmers believed that the milk price had to make up more ground to cover significant cost price increases

Clover producers in the North West will receive on average 42c/l more, while those in Mpumalanga and Gauteng will receive about 50c/l more. Some areas in the North West and Highveld had already received a price increase of 20c/l in February.

The national price of milk is estimated at R3,90/l to R4,00/l, although KwaZulu-Natal is lagging at R3,65/l to R3,70/l.

Milk Producers Organisation (MPO) SA chief economist Dr Koos Coetzee expressed hope that other processors would soon follow suit. “Everyone is very glad to get the increase, but it’s probably not enough. A calculation by farmers in the North West indicates that their feed cost alone increased year-on-year by 65c/l,” said Coetzee.

Parmalat will be introducing a new price model on 15 February to encourage farmers in the southern Cape to deliver milk with higher protein and butterfat content to its cheese factories. The model will lead to a price increase of about 9% depending on the levels of solids.

Southern Cape producer Dèan Kleynhans said there was a positive movement in price increases, but they were not enough to prevent farmers from leaving the industry. “We experienced huge cost hikes in the past six months, of between 33% and 35%,” said Kleynhans.

Twitter: @robjoubert