South African milk producers have been under immense pressure in recent times, but these pressures are much the same as those experienced by milk producers elsewhere in the world. According to Dr Koos Coetzee, chief economist of the Milk Producers’ Organisation (MPO), the situation changed from February 2014 to approximately May this year, when international dairy prices dropped by some 60%.
This decrease filtered through to producer prices across the world. The lower producer prices gave rise to lower production, based on which product prices started to increase. China has also re-entered the market and it seems as though the European economy has picked up momentum. The higher demand is setting the scene for producer prices to normalise soon. – Grootplaas