Tip-Top Milk, a leading South African milk trader and transporter, is concerned the recent import of approximately 30 million litres of cheap UHT milk by a local retailer is fostering a volatile and unstable dairy industry economy; one that is potentially detrimental to the sustainability of the country’s already dwindling number of dairy farms and the livelihood of the thousands of people employed on these farms.
Further to the importation of UHT milk, milk powder is another imported product that the local industry must compete with. These cheaper raw milk alternatives have placed increased financial pressure on farmers, their employees, and the future of the industry.
Responding to consumer pressure for lower prices, retailers are pushing for increased volumes but with reduced prices on milk and dairy products. Cheaper imports from countries where government subsidies mean lower input costs for farmers, present an immediate solution for retailers but are undermining the local market as well as the stability of the already precarious dairy industry.
“The surge in cheaper imported milk will put pressure on farmgate milk price and negatively influence milk supply in the 2024 dairy season, triggering a chain reaction that threatens the stability of the entire local dairy sector,” says Tip-Top Milk CEO, David de Jager.
“The impact of the import has already contributed to creating a distressing situation in the Eastern Cape where the farmgate milk price has dropped significantly,” says de Jager.
The challenges faced by farmers are already substantial, encompassing rising wages, escalating Eskom tariffs, increased feed prices, the impending diesel increase and mounting debts. The influx of cheaper imported milk will force farmers to consider drastic measures to make ends meet; including reducing feed, and wages; resulting in job losses across the industry.
According to Milk Producers Organisation, the dairy industry employs approximately 14 230 people, many of whom are the only source of income in families, and the gross value of fresh milk production is around R19,1 billion to the economy annually.
“The dairy industry is the backbone of many communities in the country, where there are little employment opportunities outside of the sector. Importing cheaper milk directly threatens the jobs and many more livelihoods that depend on the industry, potentially causing a local agricultural sector, that should be thriving and expanding, to shrink,” says de Jager.
Tip-Top Milk appeals to retailers to stand in solidarity with local farmers.
“Instead of exerting pressure on milk prices now, we ask that retailers help to stabilize farmgate price. There is no need to import dairy products; our own farmers, if given the opportunity, are more than able to meet the demand. The consequences of failing to address this issue are dire. If retailers do not act now, farmers will be burdened by immense financial strain, putting their ability to sustain operations and support countless local livelihoods in jeopardy,” says de Jager.
“Farmers must also understand their role in the chain. As much as they are able to supply enough milk to meet the demand, they must guard against over-supply of raw milk during spring when it is much cheaper to milk and a under-supply in autumn,” says de Jager.
Tip-Top Milk provides the Southern African dairy industry with milk logistic services and marketing of producers’ milk, while ensuring that the processes of collecting, sampling, testing, and delivering of this milk is timeous, safe, and cost-effective for all.
