Better times ahead for dairy farmers

For several years, milk producers have been squeezed by stagnant and lower producer prices and higher input prices.

- Dr Koos Coetzee

The milk-to-feed price ratio is an indicator of profitability, and the graph shows the decrease in farm profitability since February 2018.

Although produce prices improved during 2022, the sharp increase in grain prices cancelled any benefit from higher producer prices. The negative gross margin, especially the sharp decrease in profitability since February 2021, resulted in a slowdown in milk production growth and negative growth since February 2021.

Milk production fell by 3%, 5% and 6% respectively in October, November and December 2022. In the last six months of last year, 2,2% farmers delivered 2% less milk to processors than during the same period in 2021.

As in 2021, South Africa was a net exporter of dairy products in 2022.

RETAIL SALES

According to the September 2022 retail sales report as supplied by the South African Milk Processors' Organisation, retail sales in the 12 months to September 2022 were down year-on-year.