Price dips could damage dairy industry

Johannesburg – The current contra-cyclical pricing trends in the dairy industry could pose a real danger of permanent damage to the industry, Dèan Kleynhans, chairperson of the Milk Producers' Organisation, said on Wednesday.

According to Kleynhans, international prices continue to increase, making dairy imports all the more expensive.

He also said he was disappointed to find that a number of milk buyers, especially those in the drought-stricken areas of South Africa, are currently decreasing their producer prices. Actions such as this can cause great and permanent damage to these areas, he said, adding that milk buyers in supplier areas have a moral obligation to protect the sustainability of their suppliers.
 
Should this situation persist, Kleynhans said, it could lead to major geographical shifts in milk production, which could ultimately also have an
impact on the capital investment of milk buyers.

He appealed to milk buyers to act responsibly in ensuring the continuation of the South African dairy industry.

He strongly feels that this kind of behaviour could easily lead to South Africa becoming a net importer of dairy products, making it unable to supply its own population with milk in future.

Recent price decreases mean that scores of milk producers are already operating below break-even levels, setting the table for an unsustainable situation.

Kleynhans also said that he is concerned about the recent perceptible decrease in the number of milk producers, a trend which, he says, may continue for some time to come. 

  - I-Net Bridge