Structural changes in the SA dairy industry
Many structural changes happened in the South African dairy industry in the past decade or two. The number of producers decreased from 7600 in 1998 to less than 1700 in 2016. Herd sizes however increased substantially during the same period. We also experienced a migration from the typical total mixed ration in the central parts of South Africa to a more pasture based approach in the coastal regions. Dairy farming evolved into a highly technology driven industry. This transition was not fully supported by relevant research.
Historically research was largely practiced via competitive science by researchers associated with universities and organisations such as the ARC. The focus of research was not always demand-driven and did not focus on strong business drivers to ensure a sustainable and competitive dairy industry.
Periodically unpredictable market and environmental forces, such as drought exert pressure on milk production in South Africa. This usually leads to short term financial issues such as a drop in the milk price and a possible increase in input costs, which might have a long term effect on the population dynamics of the national herd. Producers start exiting the industry and animals are culled. A stable industry is a prerequisite to prevent the South African consumer from being at the mercy of international price trends.
One of the key elements to overcome the above would be research and development aimed at profitable milk production and the incorporation of the research results into farming practices. Dairy businesses need to be more adaptable to be successful. Dairy producers need to have a strategic and functional business plan in place, carefully plan their actions, manage proactively and last but not the least apply all relevant research to optimise all aspects of a dairy farm.
Functional dairy farming
Functional farming tactics, necessary to execute the main strategies are the key activities that have to be executed in the various functional areas of a dairy business namely: Human resources; production; financial; marketing and research and development so that the farming business’s products can be optimally produced and marketed.
Within the functional structure of the organised South African dairy industry, Milk South Africa (MSA) has strategic objectives which are defined in the statutory regulations of the Marketing of Agricultural Products Act (Act 47 of 1996). The strategic objective of MSA is to broaden the market for milk and other dairy products, improve the international competitiveness of the dairy industry and empower previously disadvantaged individuals.
Research and development in the SA dairy industry
The two members of MSA, namely the Milk Producer’s Organisation (MPO)and the South African Milk Processors Association (SAMPRO), jointly manage the research and development (R&D) Advisory Committee of MSA. It has a strategic and focused approach towards research and development in the dairy industry.
To give effect to the purpose of the designated levies, R&D is not only required to promote the viability of the dairy industry but also to ensure non-fragmented, coordinated R&D in respect of the strategic direction of the industry. This approach is governed by a very transparent process with opportunities for all stakeholders in the dairy industry to contribute to planning of R&D activities.
A core R&D structure, developed by MSA is administered by the MPO. In this structure inputs from the primary and the secondary industry as well as those of all the other role players in the dairy industry are evaluated.
Van Dijk, Chris., 2016.Novel Research – Functional Dairy Farming. Paper presented at the 46th Annual SASAS Conference, Stellenbosch, 4 - 6 July 2016