Dairy farmers hold a council of war

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South Africa’s dairy farmers have had enough of poor milk prices, competition from unfair and illegal imports, and ignorant consumer attitudes regarding the benefits of consuming dairy products. And at a conference at Cedara, near Pietermaritzburg, last week they vowed to step up the fight against the factors that are threatening their survival in an already precarious sector.

At a meeting called by the Milk ­Producers’ Organisation (MPO) to plot the future of the SA dairy farming industry, farmers complained that the local dairy market for the two billion litres of milk they produce annually was only ­growing a meagre 1% every year. They said there have been many cases where dairy ­farmers had simply thrown in the towel when faced with decreasing profit margins and drastically increasing input costs.

“The local dairy industry is in an extremely critical position. We are at the bottom of the price and market cycle and we can’t seem to get out of it. We must plan ahead to take advantage of the opportunities that do exist, and we must stand together to improve our situation,” said guest speaker, agricultural economist Derick Broom.An idea that emerged at the ­conference was to revert to the old cooperative ­systems of the pre-1990s. This concept, it was noted, would give producers ­collective bargaining power when ­negotiating with the larger corporate buyers and processors, and with government.

The farmers were still angry at the 22c/litre price decrease they were forced to accept by the milk buyers 18 months ago and which is still in force. The ­president of the KwaZulu-Natal MPO Quentin ­Simpson said, “We were told that the price decrease was because of milk oversupply. ­Eighteen months later we are facing 31 000 tons of dairy imports due to a supposed milk undersupply, but yet our milk price has not been increased accordingly.”

Broom said the 22c/litre decrease amounted to buyers stealing from them, and warned that if the milk price did not jump to at least R2,20/litre early next year, dairy farmers would be ­operating in the red against input costs.Well-known scenario planner Clem Sunter urged farmers to take ownership of their product by establishing co-ops to build their own processing facilities, and therefore also benefit from value-adding. He reminded the ­farmers that globalisation meant that dairy imports would always be a threat, but that Africa was a lucrative potential market that the local industry should tap into.

MPO CEO Bertus de Jongh said his organisation was also currently involved in negotiating a deal with government to supply milk to school feeding projects. A fully supported school milk initiative would increase SA’s milk requirements by 1 billion litres annually, he said.

He was also amenable to the idea of launching a concerted marketing campaign to promote what he called “the complete nutritional benefits” of milk to consumers. He said consumers had to be made aware that milk was far healthier, and cheaper, than many soft drinks that they currently prefer. – Lloyd Phillips

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