August 2, 2007

South African milk prices continues to escalate

Dairy producers are now mulling ways to control the milk prices which are now hitting at its premium. This year, milk prices hiked 45 percent to R2.70 (US$0.37) per litre from last year's R1.86 litre due to increased demand, according to the US Department of Agriculture.

Milk production this year is seen to fall by 3.9 percent or 2.5 billion litres from 2.6 billion registered in 2006 as shortage is projected at 140 million litres, reports the USDA.

The increase in prices also resulted from growing global demand particularly from China. The USDA reports retail prices for fresh milk rose to 50 percent from R10 per 2 litres to about R5 per 2 litres from January to June this year.

Clover, one of South Africa's biggest dairy producers, has spiked prices for delivery milk by 80 cents a litre this year to a national average of about R3 and another 30 cents hike this month. Another major milk producer Parmalat increased its price paid for milk by 15 cents per litre, a 7.5 percent spike from February this year.

The trend of milk producers per province is shown below:

                      Source: MPO

                       Milk Imports

                       Source: LACTODATA  *=only 50% of butter, no whey and buttermilk powder
                       taken into account.