17 Feb 2016 14:50pm
WINDHOEK, 17 FEB (NAMPA) Role players in the milk industry are busy negotiating with local dairy supplier, Namibia Dairies, about possible price increases in the near future.
Chairperson of the Dairy Producers Association, Japie Engelbrecht told Nampa on Tuesday the price of milk will definitely increase soon. He however could not give an idea of how the increases will affect consumers.
We are busy with meetings with Namibia Dairies to finalise the price negotiations, said Engelbrecht.
Currently, a litre of milk costs the consumer about N.dollars 17 and two litres about N.dollars 29 at grocers.
At a Dairy Producers Association meeting held last week, industry role players raised the concern that the drought has caused large-scale losses in terms of maize harvests in South Africa, resulting in a shortage and a huge increase in feeding costs over the last 12 months.
As the total production expense basket of the dairy producers increased with about 28 per cent during the past year, there will most probably be an increase in the price of all dairy products in order to ensure the survival of local producers.
This is of special importance as feeding costs make up the largest part of the total production cost for dairy producers. According to the dairy production cost index of the Namibia Agricultural Union (NAU), the cost of feeding increased with nearly 50 per cent over the past year, which has a big impact on the profitability on farm level, according to the NAU in its newsletter issued last week Friday.
Internationally however, there is still a surplus of milk on the market, especially in Europe and amongst that which is exported to the African market. This causes additional competition and increases the pressure on local producers and processors, according to the NAU.
The union also warned about the weakening of the South African Rand and consequently the Namibian Dollar, which ultimately means the local dairy supplier also faces challenges in terms of an increase in the prices of imported inputs in production.
The drought and exchange rate lead to double taffy for the intensive industries in Namibia, it said in the newsletter.
However, even with the short to medium term challenges experienced in the industry, producers are still positive and growth can still be brought about by good cooperation between the producers and Namibia Dairies as the biggest partner.