Cost Of Milk To Double In The Coming Months As Drought, Electricity Tariff Bites Harder – Economist


South Africa has in the recent months, been faced with a high demand for food production due to the hash effect of drought in most parts of the country alongside several other factors. Today, FNB economists have warned that market cost of milk might be higher than what it used to be in the past.

Pointing out the difficult situations dairy farmers undergo in procuring the farm products, the Senior Agricultural Economist at FNB Paul Makube warned of possible shortage in the coming months.

As consumers continue to grapple with high food prices triggered by the recent drought and the ailing economy‚ Dairy farmers are currently facing production shortages and will likely run into supply issues in the coming months‚” he said.

Dairy farmers are said to be faced with the worst pasture conditions in 120 years and this according to Makube, will have a huge effect on production and cost of milk.

The challenge we are currently facing is that most dairy farmers are still recovering from the impact of the drought and will not be able to produce enough milk in the short-term‚” he said.

Added to the effect of drought is the continuous fall of the country’s rand alongside the increased electricity tariff which will make importation of the product quite expensive and unbearable for the ordinary citizen.

Also See: Harsher Times On The Way; Spend Wisely South Africans!

Speaking on the importance of dairy products to south African consumers, Makube said having price increase on the product will “mount pressure on the already stretched disposable income‚ pressurizing them to spend wisely and cut back on luxuries.”

He however noted that the recent patches of rain in some parts of the country in the past weeks will go a long way to lessen the effect as it will help to improve grazing conditions in the short-term.

“The return of normal weather patterns in the new crop season should enable farmers to rebuild their herds and improve production from the current levels. This will play a key role in stabilizing the cost of milk and dairy products next year.”

Meanwhile, economists have also forewarned that food prices in general will continue to be on the high side with regards to the current fuel scarcity.

Economist and Head of School of Economic and Business Science at Wits University, Professor Jannie Rossouw said the petrol price increase will have a ripple effect as food prices, inflation and interest rates will go up.

Fuel prices are expected tobe on the high side by a large margin at midnight, with the petrol price increasing by 88 cents, diesel by 97% and paraffin by 76 cents a litre.

Eskom’s tariff hike by 9.4% at the beginning of this month has also been attributed to the forth coming price hike.

Rossouw however warned people to do proper planning before engaging themselves in issues that will make them spend more.

“South African consumers are in for a hard time and my advice to South African consumers at this point in time is to avoid additional debt, do not take on further commitments.”

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