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MPO press releases

24 January 2007

PRESS RELEASE ISSUED BY BERTUS DE JONGH, MANAGING DIRECTOR OF THE MILK PRODUCERS’ ORGANISATION

Consumers to fork out more for milk and dairy products

“Milk shortages are expected this year and consumers must prepare themselves to pay a lot more for milk and dairy products,” said Bertus de Jongh, managing director of the Milk Producers’ Organisation (MPO).

“The shortages can be attributed to local as well as international conditions,” De Jongh said, “Local shortages are mainly the result of low producer prices for milk over the past two years. These low producer prices are forcing many dairy farmers to leave the industry – according to MPO figures, as many as 30 farmers per month.” As a result less milk is produced every month.

“Of course, the higher meat prices also contribute to the shortages,” De Jongh said. “At present it is more profitable to slaughter dairy cows than to milk them. These cows cannot be replaced overnight and even if dairy farmers’ trust in the dairy industry is restored, it will take months or even years to replace these cows.”

In contrast with low producer prices, input costs continue to rise. Feed is one of a dairy farmer’s biggest expenses and feed price increases and the higher maize price, are putting even more pressure on dairy farmers.

“The unfriendly political environment in which agriculture finds itself, coupled with the resultant negative publicity, is also a matter of grave concern for the MPO. It does not create a favourable environment for investors or new entrants.”

According to De Jongh, international shortages of dairy products are also being experienced. The drought in Australia – the most severe in living memory – combined with normal cyclical economic conditions, contributes further to the shortages. International dairy prices are already on the rise.

“Higher international prices and the weaker rand make it expensive to import dairy products in order to supplement milk shortages,” De Jongh warned. “For the sake of the South African consumer, it would make sense to protect and support the local dairy industry, and in that way ensure that milk remains affordable.”

For further information, contact Bertus de Jongh at 012 843 5600 or 082 552 0594.

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