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Balancing the Milk Market in South Africa

11 November 2008

SOUTH AFRICA - Freddie van Zyl, vice-chairperson of the Milk Producers' Organisation (MPO), has advised milk producers to keep the current market situation in mind when doing their production planning and, if possible, to adapt their milk production.

According to the South African Meat Company he said that market indicators in terms of milk supplies are currently indicating an over-production. Although this typical seasonal peak was to be expected, the level of supplies in the industry was not foreseen. Various factors, including somewhat muted consumer spending, currently have a negative effect on milk sales.

"Should producers be able to produce less milk in the short term, it will help to stabilise the market," Van Zyl said.

"However, it remains a personal decision that each producer has to take. There are a few options to consider, especially in view of lower producer prices," says Van Zyl. For example, cash flow can be promoted by slaughtering unprofitable cows. Adapted feeding can also lower milk production and cut down on input costs. Drying cows off 14 days earlier than usual may also have an immediate downward influence on milk flow.

"Milk producers must, however, be ready to capitalise as soon as market conditions improve," says Van Zyl. "Looking at economic indicators, it seems possible that the market can recover in the New Year. Lower production is also to be expected during winter, should normal production patterns prevail. Thus replacement heifers should not be neglected now."

It seems as though the high levels of imports over the past two years, are continuing to play a role in the high supply of dairy. "The good news is, however, that the export figures of dairy products are currently overshadowing that of imports. This may lead to an improved situation in the new year."

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