“It’s estimated that about 15% of Western Cape dairy producers may leave the industry over the next few months if the current situation of decreasing producer prices continues,” said Cobus Dowry, the minister of agriculture in the Western Cape. was speaking at a recent Dairy Summit in Stellenbosch in the Western Cape. Work groups identified fragmentation and mistrust within the supply chain as central to the current crisis. Better communication within the supply chain could have prevented the large-scale import of UHT milk by retailers, as they expected a domestic shortage which didn’t materialise, the delegates said.
They were unimpressed by the Competition Commission’s handling of the dairy industry, saying roleplayers up and down the supply chain should be able to communicate in order to manage fluctuating stock levels efficiently. “Considering the fragmented nature of the dairy industry, this summit was successful in that the whole supply chain was represented,” said Dean Kleynhans, chairperson of the Milk Producers’ Organisation (MPO) in the Western Cape.
“Although an immediate solution wasn’t found for the plight of primary producers, plans can be made to prevent problems in the future.” B ertus de Jongh, the managing director of the MPO, said that increased local consumption and a strong export market could save the local industry. He said retailers can’t grow the market and it would be up to the dairy industry, through its own structures, to stimulate local consumption. “We can’t only export when we have surpluses. This needs to be a long term and sustainable strategy with strong relationships being built over time,” he said.
He added that exports are less profitable on the domestic market and could explain local producers and processors’ lacklustre approach to the export market. Individual dairy producers don’t have enough experience in exports, so it’s up to an organisation such as Milk South Africa to initiate and coordinate a strategy. H e said that the dairy industry should look at the car-manufacturing sector and the wine industry for inspiration on export initiatives. – Wouter Kriel