KZN’s dairy industry is small but vibrant and increasingly fewer farmers are producing more milk.
Colin Wellbeloved who farms a dairy herd of 400 cattle in the Boston area is the chairman of the South African Milk Producers Organisation. He says there are 984 dairy farmers in South Africa, down 46% from 2015 when there were 1 834.
Of the 984, KZN is home to 202 who are responsible for 28% of the 3,4-billion litres of milk produced in South Africa annually.
Wellbeloved says there are no reliable statistics that he is aware of for the number of employees in the dairy farming sector, but on average a farmer has an employee per 20 milking cows. The national herd is 600 000 so that equates to 30 000 workers.
While the number of dairy farmers has decreased in the last seven years, production has increased by 7%. The fewer farmers are becoming more efficient or have expanded and are benefiting from economies of scale.
But, in the current economic crunch with high input costs of diesel, electricity and fertiliser, few dairy farmers are making big profits and most will have to run lean for the next few years.
“A year ago it cost me R22 000 to fill my 2 000-litre diesel tank (at R11 a litre). Now it costs close to R50 000 to do that. Then there is the disruption cost of no electricity. Fertiliser has gone up 150% since September, but I see nitrogen is down now from a high of R18 000 a ton to R11 000. Nitrogen warehouses are obviously full and farmers haven’t bought for a while so the price has dropped. The price we get for milk has also increased from R5,20 a litre a year ago to R6,52.” (Fresh milk retails for much higher – R24,99 a litre at Woolworths).
Wellbeloved said less milk was being produced because less was being sold as a result of the weak economy. Dairies produced 4% less this year than 2020 because demand was down. There is likely to be a further reduction in the number of dairy farmers because of weak profit projections.
“If you are a farmer close to retirement I think you would consider selling your farm to a younger neighbour. If you are younger and you have built your dams you can run leaner and hang on to your bakkie for a few more years. The outlook for the next few years is not great. I think
some farmers will sell cattle to bring
in some money.”
So what are the biggest threats to dairy farming in order of priority? Stock theft; land claims; rising input costs?
“At the moment it is the lack of economic growth. We are having a hard time producing milk but the retailers are having a hard time selling it, which is down to the economy. People have less money. If you had asked me this time last year what the biggest threat was I’d have probably said political unrest and threats of land expropriation without compensation, but now they are further down the list of threats.”
Wellbeloved said the high barriers to entry meant a likely rationalisation of dairy farms. The investment in a dairy is on average R150 000 per cow. The average size of a commercial dairy herd is 700, or R105-million. In KZN the 202 dairy farmers are served by seven milk production plants, mainly in the Midlands, Southern KZN and in Durban. In theory the beneficiation of milk
at source, for example making cheese which sells at a higher value, makes sense.
If a dairy farmer produced 20 000 litres of milk a day he or she could invest R2-million on a process facility to make two tons of cheese or maas or cream, which sells at much higher values than milk. Woolworths price for yoghurt is R53,99/kg; cream is R111 a litre and cheese is R187/kg. But, branding and marketing the cheese and securing space on the supermarket shelf can come at considerable cost.
Wellbeloved says while South African dairy farmers have access to world class technology and knowledge, precision fermentation isn’t widely spoken about in South Africa. If a disruptive technology like that were to be commercially viable its biggest impact would be on employment numbers. Dairy farmers, Wellbeloved says, are on average, carbon neutral.
“We have to be environmentally sustainable. It is in our own interests to look after our animals and our land. I strongly disagree with the people who say that dairy farming is responsible for 14% of greenhouse gas emissions because they refuse to include what the caloric value of what the milk is versus its environmental impact. I can assure you that the emissions from producing or consuming a bottle of water, a trip to the mall or watering a flower garden are many times worse for the environment and provides no nourishment whatsoever.”
Precision FermentationMilk is a fundamental to most human diets. It is the first food that people consume and is loaded with vitamins, proteins, fats and minerals that are vital for growth. But cows, while key to human development, are also a big contributor to greenhouse gases. According to a 2021 report in The Guardian, cows and other farm animals produce about 14% of human-induced climate emissions. There is a growing interest in alternative proteins. Investments in this sector run into billions. Companies like Perfect Day and Remilked are gaining more attention. Here is an excerpt from Remilked’s website about the science. “Simply put, we copy the gene responsible for the production of milk protein in cows, and insert it into yeast. The gene acts like a manual, instructing the yeast how to produce our protein in a highly efficient way. We then place the yeast in fermentors where it multiplies rapidly and produces real milk proteins, identical to those that cows produce, which are the key building blocks of the traditional dairy we know. These proteins are then combined with vitamins, minerals, and non-animal fat and sugar to form every imaginable dairy product.” |