HARD TIMES DOWN ON THE DAIRY FARM
Communities shattered as farms collapse
A falling milk price and rising overheads have thrown SA’s inland dairy-farming industry into chaos. Once the milk-producing centre of the country, farmers in the Free State, the North West and Mpumalanga are now fighting to stay afloat. In 2009 there were 929 farmers in the Free State, now there are fewer than 190. Farmers in coastal regions are able to produce larger volumes at a lower cost. Pictured is Danie du Plooy, whose dairy farm Bultfontein in the Free State, is one of those in crisis.
● A milk-price war is leaving SA’s smallscale dairy farmers feeling sour.
SA’s national small-scale farmer for 2017, Willie Jacobs, an emerging farmer, had big dreams for his Hazeldene dairy farm outside Tweespruit, but like hundreds of his compatriots in the Free State and the inland provinces, those have been dashed.
Low milk prices, brokers, transporters, poor government support, cheap imports and a national Milk Producers Organisation (MPO) which allegedly has little concern for small-scale farmers, have thrown the country’s inland dairy farm sector into disarray.
In 2009 there were 929 dairy farmers in the Free State. Today there are fewer than 190, with 30 set to shut up shop later this month, after receiving notice from milk transport companies that their farms were no longer on viable collection routes.
In the past nine years 13 Free State towns, along with dozens in the North West and Mpumalanga, which are largely dependent on dairy farms for survival, have been devastated by the closing of routes.
Instead of collecting from these small towns, transport companies now travel further to collect milk from farmers in the Western and Eastern Cape and KwaZulu-Natal, who have bigger herds producing more milk for less, because their animals are predominantly pasture fed and not feed fed, which is more expensive.
The coastal provinces, according to the MPO, produce 84% of the country’s milk. Milk produced on the coast can be bought from farmers for up to R6 a litre, while inland farmers receive between R3.50 and R4.90 a litre. The price is determined by quality, volume and locality.
The average retail price of fresh milk was R12.50 up until March 2018, according to a Nielsen Consumer survey referred to by the SA Milk Processors’ Organisation (Sampro). Sampro represents companies such as Clover and Parmalat.
The closing of routes has forced dozens of farmers to abandon their land and retrench thousands of workers. A visit by Business Times to Free State farms revealed communities which had been shattered by the collapsing sector.
Jacobs said big business was killing small-scale farmers. “Desmanda, the milk transporter, has just dropped us. They want 5,000l but how can I get there without government support. I watch their trucks come past on the N8 going to KwaZulu-Natal and Eastern Cape.
“I am a member of the Free State MPO branch responsible for helping emerging farmers, but how can I help other emerging farmers if I can’t help myself? Since 2003 I have spent R800,000 [that] I received from my own bank loans to build up my farm.
“The little help I got from government was 20 vrot cows, which had no teeth. The lack of teeth meant they could not eat, which meant they could not produce milk. I had to beg for more, which I eventually got. We got hit by drought but I managed to pull myself out of it. Now we get hit by this.
“When we go to the government for help they are nowhere to be found. It has come down to big business wanting more milk for cheaper. The transport companies complain we produce too little, that our milk is bad, but how could I be the national small-scale farmer of the year if my milk is bad?”
He said he believed the transport companies such as Desmanda were deliberately trying to drive out small-scale farmers from the sector, choosing coastal farms, which produce greater quantities.
“Those buying our milk are squeezing us down to a price which makes it impossible to carry on operating.”
Desmanda owner Flip Jacobs declined to comment.
Bultfontein dairy farmer Danie du Plooy said he did not know how much longer he could carry on farming. Du Plooy last week stirred controversy when he opened the taps of his milk tanks, spilling thousands of litres onto the ground in protest over poor prices.
“I was desperate. We all are. I have watched my neighbours abandon their farms. The poor prices mean retrenchments which ultimately affect thousands of people.”
The MPO was meant to help but they were nowhere to be seen, he said.
“On top of the poor prices we have to compete against imports where overseas farmers receive state subsidies. We are being killed by this price war.”
Clocolan dairy farmer Chrissie Moolman said she received her notice from Desmanda last month.
“I don’t know what to do. They claim our milk is bad, but tests show otherwise. It comes down to greed. They want greater volumes for less.”
The MPO, Sampro and milk transport companies say farmers are not waking up to the realities of business.
David de Jager, MD of TipTop milk transport company, said it was unfair to blame them.
“We have always negotiated good prices for our clients. But, like Desmanda, we don’t decide on prices, which are decided by supply and demand.”
He said the country’s excessive milk situation had affected prices.
De Jager said TipTop had not cancelled its collection routes to the Free State in the past year.
MPO CEO Chris van Dijk said the Competition Commission prevented it from getting involved in direct negotiations with transport companies or dairy product producers on behalf of farmers, who had to negotiate their own contracts.
“We are working hard to help farmers, but in a sense they have caused this themselves. The country’s milk production is increasing year on year, resulting in extra milk which affects prices. The retailers in the end determine the milk price with the farmer primarily just the price taker.
“It’s an unhealthy situation with people at the supply-chain level playing around with what happens at farm level.”
On the route cuts, Van Dijk said it made economic sense for transporters to collect 30,000l of milk in one trip rather than drive hundreds of kilometres collecting small quantities from different farms.
“Better farming methods, genetics, improved feeding practices and specialised dairy-only farms play a role in better production.
“You cannot expect to make money by milking 100 cows. To break even on a dairy farm you need at least 320 cows, which a lot of Free State and North West farmers don’t have.
“We have advocated for farmers to expand and adopt technology to ensure their herd’s health and productivity.”
On import tariffs, he said in June the MPO had met with Sampro and MilkSA and decided to apply to the International Trade Commission for tariffs to be put in place on imports of long-life milk.
“The imports have caused some damage to the local dairy industry because dairy processors use cheap imports.”
Alwyn Kraamwinkel, executive head of Sampro, said dairy products and unprocessed milk prices were determined by supply and demand.