Poor pasture conditions and electricity tariff milk to drive up cost of milk

Severe drought conditions are likely to push up the price of milk‚ FNB economists warned on Tuesday morning.

“As consumers continue to grapple with high food prices triggered by the recent drought and the ailing economy‚ Dairy farmers are currently facing production shortages and will likely run into supply issues in the coming months‚” warned Paul Makube‚ Senior Agricultural Economist at FNB.

Poor pasture conditions caused by the drought — said to be the worst in more than 120 years — have pushed up the cost of milk production. This‚ said Makube‚ would have an impact on milk costs.

“The challenge we are currently facing is that most dairy farmers are still recovering from the impact of the drought and will not be able to produce enough milk in the short term‚” he said.

The weakened rand also meant that importing dairy products was also more expensive — and‚ on top of all this‚ a looming electricity tariff increase will also drive up costs for milk producers.

“Dairy products play an important role in the diet of consumers. Therefore‚ an increase in the price of milk will put more pressure on the already stretched disposable income‚ pressurising them to spend wisely and cut back on luxuries‚” said Makube.

But‚ he added: “On a positive note‚ the recent rains across the country in the past few weeks will go a long way to improve grazing conditions in the short term.

“The return of normal weather patterns in the new crop season should enable farmers to rebuild their herds and improve production from the current levels.

“This will play a key role in stabilising the price of milk and dairy products next year.”