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South African dairy farmers have little control over the price consumers pay for milk, with supermarkets holding most of the bargaining power in the food value chain, a KwaZulu-Natal farmer has told the South African Human Rights Commission (SAHRC) inquiry.
Richard Adamson, who farms at Glen Gowrie Farm in Bushman’s Nek near Underberg, gave evidence on the fourth day of the commission’s inquiry into South Africa’s food system on Thursday.
The inquiry is hearing evidence from government departments, food producers, manufacturers, retailers and civil society as it investigates why nutritious food remains unaffordable for many South Africans across the country’s food value chain.
Adamson said he was frustrated that farmers were often blamed for rising dairy prices when they had no say over what shoppers paid at supermarket tills.
“I get irritated when I see the media saying farmers are putting up dairy prices. Farmers do not have any control of milk prices on the shelves,” he told the commission.
He said farmers wanted to produce as much food as possible but were under pressure from rising production costs.
“We try to produce food as much as we can, but we do not make enough money from it because of the high input costs, which government does not worry about.”
Commissioner Philile Ntuli questioned Adamson about where pricing power lay in the dairy value chain. She said the commission was trying to identify who benefited the most while consumers continued to pay high prices for basic food.
Adamson said farmers had virtually no negotiating power because milk was highly perishable and must be sold quickly.
He explained that farmers negotiated with processors, who offered contracts to buy their milk at a set price.
According to Adamson, processors often argued that retailers determined the final price on supermarket shelves.
“In my opinion, the supermarkets have too much power. They have become too big. They tell you what price they’re going to pay. There’s no negotiation,” he said.
Adamson said farmers currently receive between R7 and R9 a litre for milk, depending on the butterfat and protein content.
He said even a small increase of 10c or 20c a litre would make a significant difference to farmers’ incomes.
He estimated that retailers were earning far higher margins than producers, though he acknowledged that the commission would need to hear directly from processors and retailers to understand where prices increased the most.
The farmer also defended South Africa’s dairy industry against criticism over animal welfare and antibiotic use.
He said dairy cattle were well cared for, grazing on open pastures rather than being kept indoors.
“Our cattle are looked after extremely well. They live outside, they graze wonderful pastures,” he said.
Adamson explained that strict rules governed the use of antibiotics on dairy farms. Milk from treated cows could not be sold until the withdrawal period had passed, and processors tested every load.
“If antibiotics are detected, the load is rejected. The farmer has to pay for the milk to be destroyed. It costs you a lot of money,” he said.
He said South African dairy farmers produced milk to world-class standards and should be proud of the industry’s reputation.
When asked about the welfare of farm workers, Adamson said he tried to provide decent accommodation, recreational facilities and personal protective equipment, but admitted there was still room to improve workers’ wages.
“We pay them as best as we can, but I still don’t say we pay them well enough,” he said.