South African milk farmers start to feel price pressure

Special Report:Global Financial

Crisis

JOHANNESBURG, Nov. 18 (Chinese media) -- A drop in the

international and local demand for dairy products has led to sharp price

decreases in the global and South African markets, Etienne Terre'Blanche,

managing director of the Milk Producers' Organization (MPO), said on Tuesday in

a statement.

"This decline in product prices, combined with an

oversupply ofcheese and longlife milk on the local market contributed to the

sharp decline in producer prices." Terre'Blanche said while milk producer costs

increased by as much as 50 cents and more per litre,income dropped by about 50

cents per litre.

He said the decline in producer prices was making it

impossiblefor milk farmers to cover growing input costs.

"In most cases total milk income is currently used to

purchase and produce feed. Therefore, milk income does not cover fixed costs

such as salaries, interest, electricity and maintenance and debt repayments."

The MPO appealed to milk buyers and processors to

manage supplies in such a manner that the overstocking of some market sectors

was prevented.

"If this does not happen, it will have a negative

effect on theentire market," Terre'Blanche said.

He also appealed to milk buyers not to pass the

financial pressure that occurred as a result of market conditions, on to milk

farmers.

Terre'Blanche added that producer prices must return

to more sensible levels soon.