SA production cost below world average

Information from the IFCN Dairy Report 2014 indicates that the cost of milk production for a typical South African dairy farm was on the same level in 2013 as that of New Zealand and slightly higher than that of Australia and Brazil. However, South Africa remains a low-cost producer country. The main reason for our slightly higher cost of production was the high cost of grain in 2013. As New Zealand increases production with more intensive feeding and the cost of complying with environmental aspects increases, its production cost will probably rise.

The average size of a South African herd has increased sharply as the number of farmers decline. In 2013, South African producer prices were lower than that of New Zealand, which were positively influenced by high global prices. Producer price expectations for the 2014/15 season in New Zealand are still pessimistic, but may improve in future.