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Low milk prices forcing producers out

Jul 04 2011 15:28 I-Net Bridge

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Johannesburg  - The Overberg Dairy Action Group said on Monday that 21 milk producers have left the industry in the past six months.

"Not only were these producers affected financially, but a large number of farm workers have also lost their jobs," it said.

The group said it has been told a further 12 producers would be forced to leave the industry in the next three months, should producer prices not be sufficiently increased.

"Producer prices in SA are currently at least 7% lower than a year ago. Internationally, producer prices have already been adjusted to align with global dairy prices.

"However, the South African milk producer currently experiences stagnant producer prices, while input prices have increased sharply since 2010. Import parity is currently in the region of R4/litre, while the average producer price locally is about R2.80/litre."

The group added that producers had voiced their dissatisfaction over price mechanisms which, they claimed, negatively affect milk producers in the Overberg region in the Western Cape, while producers in other regions benefit from it.

"This 'take it, or leave it' approach will lead to some of the best quality milk in the country being lost to the consumer.

"The discontinuance of milk production in the Overberg region will put further pressure on the environment, in that milk buyers will have to transport their raw material over long distances to processing plants."

The group said new structured business units at producer level were planned to address imbalances in the value chain.

milk  |  dairy

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