March 19, 2025

South Africa's dairy industry set for growth amid economic improvements

South Africa's dairy industry is expected to grow as economic conditions improve, according to the latest research by the US Department of Agriculture (USDA).

Despite challenges related to weather and disease over the past five years, the report indicates an increase in demand for dairy products both domestically and from potential trade partners.

The number of dairy farmers in South Africa has declined by 60% over the past decade, according to the USDA. The report attributes this reduction to pressure from low prices paid by processors and competition from imported ultra-high temperature (UHT) milk. Many small dairy farmers have been unable to sustain operations due to a lack of economies of scale and have sold their herds to larger producers.

The South African commercial dairy herd is estimated at 1.27 million head, with Holstein and Jersey cattle being the predominant breeds. However, per cow productivity has declined due to price pressures and unfavourable feed and climatic conditions over the past ten years.

In 2023, the average milk production per cow per day was recorded at 16.1 litres (4.3 gallons), down from 21 litres (5.5 gallons) in 2018. The decline has been attributed to heat stress, rising production costs, and the exit of farmers from the industry.

Corn prices, which reached record highs over the past year, are expected to decrease once the new harvest season begins in May. In addition, an outbreak of foot-and-mouth disease (FMD) affected dairy cattle in 2024. However, with improving conditions, milk production is forecast to increase in 2025.

Dairy processing trends are closely linked to consumer disposable income and inflation, both of which are showing signs of improvement in South Africa. The USDA report also notes that demand for processed dairy products is expected to rise following the introduction of a new trade protocol for exports to China.

- Agriland