South African dairy farmers entered 2018 with a difficult contradiction: milk production was growing, yet the price producers received was falling. The Dairy Mail’s reports show that these pressures were already changing decisions on farms. Their central practical message was to watch supply and prices closely, plan for the consequences of a downturn, and strengthen the skills and resilience needed to keep farms sustainable.
The supply-price squeeze
Preliminary Milk SA figures put total milk intake in May 2018 at 239 million litres, 3% above May 2017. But it was also the first May since 2015 in which intake was lower than April’s. At the same time, Statistics South Africa’s producer price index for milk ex-farm showed that farmers were receiving 8% less than in November 2017. MPO economist Dr Koos Coetzee said farmers were responding to lower prices and processors’ announced further reductions by slowing production growth. He warned that additional cuts could lead to undersupply in spring and summer.
A later report sharpened the warning from the supply side. Bertus van Heerden, the MPO’s manager of agricultural economics services, said growth in raw-milk supply during the first six months of 2018 was putting producer prices under pressure. Supply was too high and needed to be limited if producers were to avoid low prices persisting through 2019. The information on raw-milk supply was available, he observed, but the other side of the price equation—demand—was not fully visible. As a result, the milk price appeared largely to be derived from the monthly production figures.
That imbalance matters to farm planning. Production statistics can show what is entering the market, but they do not by themselves explain the full relationship between supply, demand and price. Farmers facing lower returns therefore had to take care not to treat recent output growth as a guarantee of future income. The reports do not offer a universal production target; instead, they document a sector in which farmers were already curbing growth as prices fell, while further reductions risked a shortage later in the year.
Why the pressure was uneven
The difficulties were not distributed evenly across the country. The MPO described inland producers facing serious challenges after receiving notices that milk collection from certain farms would stop, alongside producer-price reductions. MPO chief executive Dr Chris van Dijk attributed the situation partly to a more favourable milk-to-feed price ratio, which had encouraged surplus production in coastal provinces. Greater milk availability gave buyers an opportunity to use economies of scale by sourcing from larger producers. Imports of UHT milk during the surplus period added further pressure.
The practical implication is that a national production picture can conceal sharply different local realities. A more favourable relationship between milk and feed prices may encourage production, yet the resulting surplus can intensify buyer selection and leave some producers exposed. Van Dijk’s account linked the immediate challenge to the wider sustainability of dairy production, rather than presenting price reductions as an isolated market event.
Use industry contact and information
MPO roadshows offered farmers a forum to hear about the market and exchange experience. At meetings in the Eastern Cape, Dr van Dijk reviewed production, imports and exports, while MPO market development manager Barbara Bieldt explained import-tariff policies and procedures and the organisation’s role in protecting the dairy market. The meetings also enabled producers to interact with MPO directors and staff and discuss issues affecting them.
The MPO’s KwaZulu-Natal roadshows similarly combined a market update with practical topics. At meetings near Winterton, Howick and Underberg, van Dijk discussed production, imports and exports and the MPO’s three priorities: profitability, people and planet. Speakers also addressed offshore investments and ways to grow and graze more. For farmers dealing with volatile prices, these gatherings were an opportunity to compare experience and connect market developments to farm-level management, rather than make decisions in isolation.
Invest in management and stewardship
The episode’s reports also point to skills development as part of resilience. The MPO Training Institute’s dairy production management course covered farm design, nutrition according to production, computer-based programmes and milk recording, as well as breeding, animal health and biosecurity. The qualification included theoretical learning, practical training and work experience. Farmers wishing to arrange training on a farm were directed to contact the institute’s training and client support manager.
Other courses addressed specific capabilities. A Veld and Pasture Management course at Cedara College of Agriculture was designed for current and potential dairy farm managers, at NQF Level 5; successful students received a certificate of competence after a knowledge assessment and work assignment. In 2018, the MPO also sought commercial dairy farmers willing to mentor students, providing workplace experience, exposure to farm disciplines, progress monitoring and accommodation. These initiatives treat people and management knowledge as part of the farm’s long-term capacity.
Stewardship extends beyond output. The MPO described its strategic aim as sustainable dairy farming and promoted recognition of farmers who care responsibly for their farms. Its material also identified water stewardship as part of the organisation’s 2018 strategic plan and referred to the MPO 3P Metric as a tool developed to measure sustainability on dairy farms. Taken together, the reports present a practical response to volatility: follow the available market information, understand how local supply conditions affect access to buyers, develop sound production and management skills, and consider sustainability alongside profitability. A sector under price pressure cannot control every market force, but informed planning and stronger farm capability can help producers navigate the uncertainty.
Key points
- May 2018 milk intake reached 239 million litres, 3% above a year earlier, while ex-farm producer prices were 8% below November 2017.
- The MPO warned that raw-milk supply growth was weighing on prices, while insufficient demand information made the full price picture difficult to assess.
- Surplus supply affected regions and producers differently, with coastal production growth, buyer scale advantages and UHT imports among the pressures cited.
- The MPO promoted roadshows, practical training, mentoring and stewardship tools as ways to strengthen sustainable dairy farming.