Consumers will continue to experience milk shortages for a few more months to come. According to the managing director of the Milk Producers’ Organisation (MPO), Etienne Terre’Blanche, the current shortage is a result of a lower supply and a bigger demand for milk and dairy products.
Although producers are now receiving 24% more for their milk than at the same time last year, the price increase will not have an immediate effect on milk production. Despite the fact that steps are being taken to increase production, production usually only starts increasing in early September. However, the shortage of roughage, especially in the summer grain areas, will limit production increases.
The impact of the shortages is bigger in certain areas of the country where popular brands are conspicuously absent from the shelves. The causes for these shortages are geographical and are, among others, a result of milk producers’ relationship with their buyers as well as the drought experienced in some parts of the country.
In the meantime international dairy prices have increased to such an extent that imports at normal prices are no longer possible. This contributes towards the shortage.
The drop in the number of milk producers from 7 200 at the beginning of 1998 to the current 3 800, also resulted in a loss of jobs in agriculture. An estimated 66 000 workers worked on dairy farms. Currently the number of workers is estimated at 38 000. Over the past ten years 28 000 job opportunities were lost in the primary sector.
Two years ago milk processors followed in each other’s steps and dropped the producer price for milk from R2 per litre to R1,78 per litre. Soon thereafter the price of maize and other grains increased sharply. As a result, the profitability of milk production came under severe pressure.
Milk producers could no longer produce at these costs and many producers used favourable meat prices to stop milking. Given the fact that an estimated 30 dairy farmers have left the industry each month over the past three years, it logically follows that milk production would drop.
The demand for dairy continues to grow. Bigger consumer income, particularly in the lower income groups, has led to a sharp increase in the consumption of dairy products as consumers can now afford to switch from starch to protein.