MPO National Annual General Meeting Chairman’s report – Resilience and reinvention

14 October 2021

My fellow farmers,

This past year has been filled with as many opportunities and challenges as I have come to expect from dairy farming over the years. Better than average rainfall in most parts of the country (excluding the Eastern Cape) has provided us with full dams and bumper crops, which may be the only reason many of us, including myself, have managed to stay in business.

A stuttering economy with 44% unemployment is making trading terms difficult. The record low consumer price index cannot keep up with the producer price index, which is unsustainable. Farm gate milk prices are all but stagnant (1%–5%), while key inputs have increased by 30%–50%.

Crops being planted now are at least 40% more expensive than this time last year, mostly due to higher fertiliser and energy prices, so it is tough going indeed. Milk supply is down 1,83% for the first nine months of this year and it will be impossible to reverse this trend unless return on investment improves. As a result, we may see more dairy farmers diversifying to other crops and businesses with more attractive returns.

Given the changing circumstances of our industry and following broad consultation, the board embarked on an intensive restructuring of the MPO. Operating expenses have been reduced by around two thirds, and  we now have an organisational structure that is within our means, fit for purpose, and sustainable. We are a few weeks away from appointing a new chief executive officer.

So, some positives to take out of the industry this year:

1. We remain a net exporter of dairy products, which means to me that we are extremely competitive producers, even under the current circumstances.
2. Despite the devastating toll that the July unrest had on much of the country, we recovered really quickly. As soon as the roads were reopened, produce started flowing and we got back to doing what we do best, producing food. I am sorry for all of us who had to discard around 1 million litres of milk and for the loss of production incurred, but I suspect that it could have been a great deal worse had organised agriculture and patriotic civilians not put their best foot forward.
3. Our silos and dams are full at least, even if our bank accounts are not.
4. The International Monetary Fund recently just reviewed South Africa’s growth forecast up to 5% for the year, albeit from a low base.
5. As our industry changes, so have our farming business. We are among the cheapest producers in the world with the largest herds, and according to various study groups figures, we are still getting better.
6. More and more producers are becoming invested in the secondary industry and brokering groups. This should bode well, if we can leverage our unity to discourage importing milk when it is not absolutely necessary.

There is still plenty of work to do to improve our lot as farmers and the MPO, but I firmly believe that the worst is behind us now.

I would like to thank all our members for their support and encouragement throughout this challenging year. I would also like to thank the board, with a special mention to vice chairperson Zola Gebeda, and to Fanie Ferreira who was prepared to leave his farm and home to move to Pretoria to act as chief executive officer during the restructuring phase. Fanie, we are all very grateful for the sacrifices you and Marietjie made. We will ‘owe you one’ for a very long time. Thank you.

To the staff at the MPO, including those who have been retrenched or retired, thank you for your years of service to dairy farmers. Your contribution is greatly appreciated.

I know that times are tough at the moment, but I also know that we are a resilient and resourceful bunch who likely to still be here when the good times arrive. Thank you.

Congratulations to the winner of the MPO Nedbank Stewardship Awards 2021, Andrew Morphew from Colbourne Farm in Howick, and to the winner of The Dairy Mail Innovation Awards 2021, Hive Carbon with Biochar.

Well done to worthy winners!