Special Report:Global Financial Crisis
JOHANNESBURG, Nov. 18 (Xinhua) -- 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.
