Loading...

Lifeline for ailing Free State milk industry

Aug 04 2015 07:50
Dane McDonald, Fin24

Cape Town – The ailing Free State dairy industry received a breather from a milk broker who agreed to buy from regional farmers, following the closure of the 27-year-old Montic Clocolan milk depot.

Martin Swanepoel, CEO of Montic holding company Sontic, told Fin24 that the economics of having a depot in the region do not make financial sense in the long term.

“Some of the bigger producers, that traditionally went through Clocolan... have found other milk buyers... with Clocolan left with the small buyers,” he said.

Clocolan is a collation depot which sends out vehicles to collect milk from farmers. From the depot the milk is transferred to tankers which then transport it to Heidelberg production facilities in Gauteng.

The depot is also facing challenges around milk quality and certification, according to Swanepoel. “With the Consumer Act retailers are focused on quality issues, with audits from the suppliers to the shelf,” he said.

“They (farmers) won’t get anybody to buy the milk if they don’t fix it. They need to have correct certificates and 75% don’t comply.”

Milk broker steps in

Philip Swart, producer services manager of the Milk Producers Organisation, told Fin24 that the livelihood of 70 farmers and their employees, who have up to 6 dependents each, was in the balance before an offer by a milk  broker to service the producers.

According to Swart, Desmanda Transport will buy 1.3 million litres of the 2 million litres of milk previously bought by the Clocolan depot.

DA weighs in

Despite the reprieve provided by Desmanda, the Free State dairy industry continues to shed producers and jobs.

According to DA MP in the provincial legislature, Roy Jankielsohn, the number of milk producers in the Free State has dropped from 987 in January 2007 to a mere 316 in September 2014. "This amounts to a 68% reduction in milk farmers in the Free State over a period of seven years.

“In December 1997 the Free State was producing 18% of South Africa’s milk, which dropped to 9.5% by October 2013,” he said in a statement.

“Input costs such as electricity, fuel, grain, and other products required in the dairy industry have increased dramatically over the past few years. This has not been matched by similar increases in prices paid to producers for their milk.

“Furthermore, the importation of dairy products from countries whose producers are often subsidised by their governments impacts negatively on our local industry,” he said.

According to Jankielsohn the dairy industry is highly specialised, and he cautioned against the loss of production capacity and priceless dairy herds that have been bred over generations.

“The industry is also labour intensive, which implies a great number of potential job losses in an area of the province that cannot afford this,” he said.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

agribusiness
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

How sincere do you think is President Cyril Ramaphosa?

Previous results · Suggest a vote

Loading...