South African Dairy Farmers Struggle with Supermarket Pricing Power
South African dairy farmers face challenges in controlling the prices consumers pay for milk, as supermarkets exert significant influence over the pricing dynamics. This issue was highlighted by Richard Adamson, a farmer from Glen Gowrie Farm in KwaZulu-Natal, during an inquiry conducted by the South African Human Rights Commission (SAHRC) into the country's food system. The inquiry seeks to understand the reasons behind the unaffordability of nutritious food for many South Africans.
Adamson expressed frustration over the misconception that farmers are responsible for increasing dairy prices, emphasizing that they have no control over the final prices set by supermarkets. He noted that farmers are pressured by rising production costs and have limited bargaining power due to the perishable nature of milk.
The inquiry, which involves various stakeholders including government departments, food producers, manufacturers, retailers, and civil society, aims to identify who benefits most within the dairy value chain while consumers face high prices for essential food items. Commissioner Philile Ntuli questioned Adamson about the distribution of pricing power, highlighting the need to pinpoint where the most significant price increases occur.
Adamson explained that farmers negotiate with processors, who set purchase prices through contracts. However, he claimed that retailers have the final say on shelf prices, limiting farmers' ability to negotiate. Farmers currently receive between R7 and R9 per litre of milk, with minor price increases potentially making a significant impact on their income.
In defense of South Africa's dairy industry, Adamson addressed concerns about animal welfare and antibiotic use, stating that dairy cattle are well cared for and graze on open pastures. Strict regulations govern antibiotic usage, ensuring milk from treated cows is not sold until deemed safe, with any contaminated loads being rejected and destroyed at the farmer's expense.
Regarding farm workers' welfare, Adamson acknowledged efforts to provide decent living conditions and equipment but admitted the need to improve wages. This aspect remains a challenging issue for the industry as a whole.
