Eastern Cape now top SA milk producer

THE Eastern Cape has doubled milk production over the past decade and is now the top milk producing province in South Africa.

Speaking at the Eastern Cape Milk Producers' Organisation (MPO) annual general meeting at Slipperfields in Port Elizabeth, chairman Simon Matthews said if milk prices continued the upward trend of the past year, maize prices stayed at the present levels, and early spring rain was realised, the dairy industry would enjoy a good run.

"The dairy industry is a good one to be in, and this reflects in the continued growth of milk supply in the Eastern Cape. We are now the biggest milk producing province, with production having doubled in 10 years.

"National production is slightly down on last year's corresponding production, but forecasts still indicate a similar annual production of about 2.8 billion litres," Matthews said.

Earlier this year, Matthews along with other Eastern Cape milk producers supported a national call for the price of milk to increase to sustain the dairy industry in the country. The national MPO made the call in January, saying the price of milk paid per litre to dairy farmers did not cover input costs, which made dairy farming unprofitable and forced many farmers to exit the industry.

The organisation cited the high cost of maize, fuel and power combined with increased labour costs.

However, in his annual address Matthews, who farms with more than a thousand dairy cows in the Alexandria region, said the industry was a dynamic one to be involved in.

"I attended a presentation recently on the financial returns of the different livestock industries of our region and was pleased to hear the dairy farmers, relative to the other livestock enterprises, enjoyed reasonable returns.

"As an industry, we too often sketch a picture of despair – milk prices are too low, input prices are up, the dairy farmers are exiting the industry and the list goes on. If you compare our position to the average livestock farmer, in sheep or beef, we are relatively better off," he said.

The average price of milk at present was R4.25 a litre, Matthews said.

"The same milk was R3.80 per litre this time last year, which is effectively a 12% increase. Granted, our main cost of concentrate feed peaked two months ago, but it has dropped significantly, and the yardstick of milk to meal price ratio is now at 1:40, the best it's been since 2010. Fixed costs have increased significantly, some well above the inflation rate."

Matthews said internationally this year had seen dairy products trading at the highest prices ever.

"Unfortunately in June the prices dropped off, and this reflects in the import parity coming off a price of R7 a litre, to a figure of about R5.60 per litre.

"This is a typical trend line in the industry, with an increase, followed normally by a correction. All in all, signs are positive for the dairy industry," he said. - Cindy Preller