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The South African dairy sector is leveraging the free-market system to remain afloat during tough economic times, and this tight-rope act just might pay off.
Milk SA’s latest figures indicate that 4,33% more milk was purchased in August 2025 (318 002 tonnes) than in August 2024. This means that a total of 2 135 887 tonnes has been bought during the first eight months of the year, which is 0,83% more than over the same period in 2024, and 4,17% more than in 2023.
Nico Fouché, chief executive officer of Milk SA, said they’ve noticed over the past two or three quarters that retail sales volumes for many mainstream products have started picking up and are performing moderately better than before. “We also know that import volumes are still decreasing drastically, with a positive export trend, which should result in positive local milk production. Raw milk production should therefore catch up with increased consumption, but foot-and-mouth disease (FMD) has had a negative effect in the affected regions.”
Over the first quarter of this year, the country saw an average growth in milk purchases of only 1,6% (year-on-year) and in the second quarter, a decrease of 1,6%, Fouché added. However, for July and August, the year-on-year average is 3%, but from January to August 2025, the milk intake/milk production is only 0,83% higher than the corresponding period last year.
A warning shot to the local market
Given the weak local economic situation, export growth and import replacement have been a saving grace to the South African dairy industry, says Bertus van Heerden, economist of the Milk Producers’ Organisation (MPO).
According to his calculations, for the first seven months, South Africa has exported 25% more dairy products on a milk equivalent basis than in the same period in 2024, and it has imported 56% less dairy products on a milk equivalent basis. When the local supply is factored in, this means that there are 171 million litres of milk less available for local processing than in 2024, Van Heerden warns.
“Currently, we have a situation where we have 6,4% less milk available for processing locally (first seven months), which means that we could sit in a situation where there could be shortages – even if production is set to increase now during spring. If the lower level of supply available in South Africa for the first seven months of 2025 is enough to balance with demand, our market for domestic growth is in more trouble than I expected.”
Economic realities
Alwyn Kraamwinkel, CEO of the South African Milk Processors’ Organisation (Sampro), said despite a tumultuous economic backdrop, the South African dairy industry was able to adjust successfully to changing circumstances to meet the demand of especially South African consumers and industrial buyers of dairy products.
He specifically referred to the fact that the country’s economy only grew by 0,53% in 2024; 0,1% in the first quarter of 2025, and 0,8% in the second quarter of 2025. Despite these harsh realities, most retail sales quantities of most dairy products had increased, Kraamwinkel highlighted (Table 1). However, increased quantity did not overlap with price increases. While most dairy products saw a slight retail price increase, a few dairy products suffered a price decrease.
Table 1: Changes in retail sales volumes from July 2023 to June 2025, and changes in retail prices from June 2024 to June 2025. (Source: Sampro, based on information supplied by NielsenIQ.)
| Product | Change in retail volumes (%) | Change in retail prices (%) |
| Fresh milk | -0,7 | -2,4 |
| Long-life (UHT) milk | 5,7 | -1,3 |
| Flavoured milk | -0,8 | 7,9 |
| Yoghurt | 3,5 | 2,7 |
| Maas (fermented milk) | 7,3 | -0,5 |
| Pre-packaged cheese | 3,8 | 3,2 |
| Cream cheese | 3,9 | 3,3 |
| Cream | 5,1 | 0,9 |
On the bright side, while imports fell, dairy product exports increased.
“Additionally, the production of unprocessed milk, which was in 19 of the 22 months up to August 2025, was higher.”
Low growth rate expected
Regarding the performance of the South African dairy industry in the immediate future, Kraamwinkel stated that the growth rate expected by the South African Reserve Bank is low and that it does not support optimistic expectations about a significant increase in the demand for consumer goods, including dairy products.
During the Bureau of Food and Agricultural Policy (BFAP)’s annual baseline function, it was also highlighted that South African consumers are becoming poorer. At the event, it was highlighted that South Africa’s lower Living Standards Measures-groups (LSMs) are growing, while the higher income groups (LSM 8–10) are shrinking. – Susan Marais, Plaas Media
