“The only guarantee for the long term survival of South African milk producers is a production price of at least R4/ℓ,” said Koos Pienaar, chairman of the Free State Milk Producers’ Organisation. “Their economic survival is increasingly threatened by low production prices, despite the significant increase in 2007.”
“The solution for self-sufficiency is a price on par with import parity. However, the retail sector is so set on maximum profitability that local products are regularly overlooked. The irony is that consumers seldom, if ever, benefit from the cheaper imported products, which are used by the retail sector as a lever to force production prices down, while consumers still have to pay high prices,” said Pienaar. “Milk producers would be forced to pursue other avenues should the retail sector and processing industry not fulfil their responsibility for the even distribution of profitability on the entire chain of milk production.”
Pienaar also feels strongly about the secrecy, as he put it, in which the milk price is shrouded. “All agricultural commodity prices are available on Safex or in the media, except the milk price. This leaves producers at a disadvantage when prices are negotiated with buyers,” he continued. M ilk producers, however, also have a responsibility to ensure profitability and consequently economic survival.
“One can no longer produce milk at a farmgate price. Producers should be very analytical about what they produce and for which market. It’s imperative they’re aware of the market demands and who they produce milk for,” concluded Pienaar. “Milk production is an exact science and a challenging business.” – Annelie Coleman