The facts about milk supply: ‘Don’t worry’

Consumers will not face empty shelves this autumn.

According to Dr Koos Coetzee, economist of the Milk Producers’ Organisation, consumers will not have to worry about the supply of dairy products this autumn.

A recent press release created the impression that South African milk producers will not be able to supply enough milk to local processors to ensure that consumers continue enjoying a variety of high-quality dairy products.

Total milk production in South Africa increased by a record 6,4 percent between 2014 and 2015.

A decrease in producer prices in 2015 and the worst drought in decades led to sharp increases in the prices of grain and other farm requisites. By September 2015 farmers were cutting back on concentrate and even on roughage feeding. This resulted in a slowdown in the growth of milk production since December 2015.

This trend will probably continue as farmers struggle to provide scarce and expensive roughage to their animals.

However, production is still higher today than in 2014. Total production for the 12-month period ending in February 2016 is at 3 061 million litres, 243 million litres (8,6 percent) more than during the same period in 2014/2015 and certainly enough to ensure sufficient supply.

Maize prices are currently 100 percent higher than in January 2015 while producer prices are more or less at the same level.

Pressure on milk producers will increase as the prices of imported goods and administered prices increase. Producer prices will have to increase soon to enable farmers to continue producing milk at a positive margin.

The market for dairy products continues to grow. In 2015 sales of long life milk increased by 14,4 percent while sales of most other categories increased by 5 percent and more.

The single exception was fresh milk sales, which decreased by 1,6 percent. Based on the percentage market share of long life milk and fresh milk the liquid milk sector grew by 7 percent.

Farmers will have to maintain and increase production in the short term to meet this growing demand. Increased producer prices are necessary to stimulate increased production.

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