Parmalat to pay milk suppliers more

"We are committed to the sustainability of the dairy industry and it is imperative that dairy farming continues to be viable in this country. This is important as BEE in the sector will only meet the desired economic transformation objectives if the sector is financially strong," he adds.

Agreement was reached with SAMILCO on 24 January. SAMILCO represents dairy farmers supplying more than 90% of the annual milk requirement of Parmalat of over 400 million litres. The increase is based on an average price as milk prices vary according to quality and solids content.

Hendrickse expressed his concern and recognition that the agricultural sector was generally under pressure, with farmers being hit by the rising costs of feed, fertiliser, fuel and wages.

"Parmalat is faced with a dual commitment. On the one hand we should pay a fair price to our milk producers to secure our milk supply. On the other hand, however, we have a strong commitment to ensure that consumers get these essential products at affordable prices. Our concern is that in recent years the prices of certain dairy products have stagnated and bear no relation to the high nutritional value of these products."

"Based on the latest information available, the year-on-year inflation rate for dairy products is only 3.92%, compared to that in the total food category of 7.14% over the same period. Within the basket of dairy products, some sub categories, for instance UHT (long life) milk, realised a price deflation."

According to Parmalat, these actions are taking place within tough competitive conditions in the market.