Parmalat advert milks debate

The latest Parmalat ­advertisement has left a sour taste in the mouths of numerous SA dairy farmers.

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In an advertisement that appeared in The Sunday Times on 10 June this milk processor made it clear that, although there would be a milk shortage for the next 12 months, the company was committed to resolve the problem with “as little disruption to you as possible”. Parmalat also promised consumers that they would still be able to buy SA’s best milk products at the best prices.

However, what infuriated dairy farmers like Charlie MacGillivray, was the fact that Parmalat said: “Part of our solution has been working with our milk producers to help them increase their herds.” In a heavy-worded letter MacGillivray wrote: “Had that colluding collection of profiteering processors not slashed the producer price (in unison) two years ago, insisting it was as a result of a surplus of milk, there would be a slight shortage at present caused mainly by environmental factors which we all accept go with the territory of farming and are typical of this time of year.”

Around February 2005 milk prices received by farmers dropped drastically. At the moment farmers receive around R2,30 per litre depending on the area where milk is sourced. At the moment the retail price of milk ranges between R14 and R17,50 per two-litre bottle, according to the Milk Producers’ Organisation (MPO).  As far as the advertisement goes, Etienne Terre’Blanche of the MPO said as an organisation they were glad that someone was trying to rectify the current situation. This advertisement was, however, the first time that he has heard that Parmalat is trying to help SA dairy farmers to build up their herds.

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On 8 June Parmalat sent out a letter to milk producers in which the processor stated it wanted to set a fixed price with producers until the end of 2008 to secure stability in milk supply. The price will probably be fixed around R2,60 to R2,70.
Terre’Blanche, however, said: “From an MPO viewpoint we would like to warn dairy farmers about getting themselves involved in long-term contracts in view of the current economic situation and also to keep in mind the concept of taking control of their own product (group forming).”

SA’s Milk Corporation manager Andre van Heerden believes Parmalat is trying to rectify past actions and that the processor is now more focused on sustainability.  Van Heerden believes it could be more beneficial for farmers who would like to have certainty of what their income will be for the next year to sign contracts with this milk processor. He explained that the fixed prices will work much like that of grain.

According to Koos Coetzee of the MPO, milk import parity is currently R3,92. This is far above the amount local farmers currently receive and even above what Parmalat offers dairy farmers who sign a fixed contract with them. Parmalat could not give comment at the time of going to press. – Susan Botes