November 19, 2008
A fall in global demand for dairy products has severely affected South Africa's dairy market, according to an industry expert.
The decline in product prices combined with high supplies of dairy products in the domestic market have contributed to the sharp fall in producer prices, said Etienne Terre'Blanche, managing director of the Milk Producers' Organisation (MPO).
Production costs have increased by as much as 50 cents per litre, while income went the other way, dropping 50 cents per litre, said Terre'Blanche.
He said the fall in producer prices was making it more difficult for dairy farmers to cover rising input costs.
The MPO urged dairy buyers and processors to prevent overstocking to avoid negative impact on the market.
Terre'Blanche also said milk buyers should not pass additional costs to milk farmers and that producer prices must return to reasonable levels soon.