oa Agriprobe - Questioning current milk pricing structures in the dairy industry in South Africa

Volume 3, Issue 4
  • ISSN : 1810-9799



The milk pricing system for dairy farmers in South Africa was previously controlled by the Dairy Board. Basically two pricing systems were used, i.e. one for fresh or liquid milk consumtion and another for industrial or processed milk. A higher price was usually paid for fresh milk. In 983, the Dairy Board adopted the slogan ""Milk is Milk"" in an effort to pay all farmers a uniform price for their milk. Currently, milk prices are determined by the milk processors themselves resulting in various milk pricing structures. Payment for fresh milk is based on volume (liters) containing minimum levels of fat and protein percentages. The payment for milk for processing is based on the amount (kg) of fat and protein produced. The payment for fat and protein usually varies with a higher price for protein. Sometimes an additional premium is paid for protein to stimulate a higher protein production. Most milk processors also provide fresh milk to the market. Notwithstanding all the efforts to change, there are still real price disparities between fresh and industrial milk. Farmers still compare milk prices directly regardless of payment system. Individual milk prices will always differ because of different fat and protein percentages in milk and the amount of milk produced.

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