Stagnant milk production disappoints

According to MPO economist Dr Koos Coetzee, milk production in the first half of 2014 is lower than during the first half of 2013. This is disappointing as local demand continues to grow at more than 3%. Speaking at the Eastern Cape MPO AGM Dr Coetzee said the main reasons for the slow growth are the lower producer prices in 2013 and the sharp increase in feed prices in the beginning of 2014. Currently, the milk:feed price ratio has improved substantially from below 1,1: 1 to 1,45: 1 but is not expected to result in higher production growth this year. International product prices are in a decreasing phase but, as South African producer prices did not follow the sharp increase in producer prices during 2013, the current decrease in product prices will not result in lower producer prices. Dr Coetzee emphasised that although all indications are that grain prices will remain low, there are no guarantees that it will indeed remain low. Farmers must carefully plan their grain purchases for the next year.