The situation within the dairy industry is still critical, especially with the increase in input costs. A contributing factor to this increase is the rising feed costs due to the drought. This was the conlcusion the management of the Dairy Producers Association (DPA) came to during their latest meeting where various issues in the dairy industry were discussed.
The message during the latest meeting of the Dairy Producers organisation was however that dairy production in Namibia is currently in a good place. The reason for this is the weakening exchange rate that makes it more expensive to import milk and dairy products into Namibia. Furthermore, indications of possible milk shortages in SA could also increase milk prices. This situation could enable Namibian producers to increase their milk production. Currently the import of cheap milk has decreased and this allowed Namibia Dairies to sell their surplus milk. In light of this, Namibia Dairies announced the re-instatement of 20 cents per litre, which producers gave up three months prior, in an effort to compete with cheap milk imports. This 20 cent per litre brings great relief to producers in difficult times.
The management of the DPA also discussed how to initiate the school feeding programme together with the Government.
Dairy Production Cost Index
The poor maize harvest in South Africa the past season led to a great increase in maize prices and this is shown clearly in the production cost index for the dairy industry in Namibia. Since the beginning of 2015 there have been various increases in feed costs that negatively influenced, among others, the dairy industry. Feed contributes to 65% of a dairy producer’s production cost. The production cost index shows a 22% increase in feed costs the past year whilst other inputs such as labour and electricity also experienced increases over the same period. Only fuel costs had a downward movement. The producer milk prices only increased with 9% in comparison with the same period the previous year, which means that the profitability of dairy producers dropped intensely the past year. This phenomenon is however noticeable worldwide as there is a significant period of surplus production of milk in various countries.