1. The African dairy scene Koos Coetzee Milk Producers’ Organisation September 2014

2. Geographical orientation You are here

3. Contents The dark continent awakens Dairy situation in Africa Dairy situation in South Africa Challenges for dairy development in Africa

4. Demographics Population – 1,033 billion in 2013 (second highest continent) – Highest population: Nigeria: 173,611,131 Ethiopia: 95,045,679 Egypt: 82,196,587 Democratic Republic of the Congo: 67,363,365 South Africa: 52,914,243

5. Demographics Population growth – 1,9 billion by 2015 – Quadruple in 90 years – Nigeria close to 1 Billion by 2100 – Possibly higher than Chinese population – Nigeria = size of Texas

6. Demographics Urbanisation – Largely through rural – urban migration

7. Demographics Young population – Sub Saharan Africa 43% 0 – 14 52% 15 – 64 – EU 16% 0 – 14 65% 15 – 64 – World 26% 0 – 14 66% 15 - 64

8. Income growth Fast economic growth Wealth concentrated in few hands Growing food demand Met by imports

9. Growth of retail sector Up to 1990 informal trade based Supermarkets developed in SA and Kenya By 2003 SA supermarkets were active in 13 countries Currently: – Shoprite Checkers 1 396 outlets in 16 countries – Masmart 15 countries Walmart share through investment in Masmart – Pick n Pay

10. International involvement Danone/ Brookside Parmalat Nestlé Campina Fonterra (CFI)

11. Dairy farming in Africa Country Milk production, 2010 Number of dairy farms Number of dairy cows Production growth (%) mil.t. ECM**('000)1000 cows2006-2010 Algeria1.5208220.8 Egypt6.39753 6001.7 Cameroon0.14.032700 Ethiopia322 4569 6286.1 Kenya3.91 7256 9042.8 Morocco2.22611 8357.5 Nigeria0.53254 2521.4 South Africa2.82.65302.6 Sudan5.6----14 4500.2 Uganda1.21 6634 2935.5 Rwanda*0.35---- Dairy statistics, selected African countries, 2010

12. African dairy farming Total production = 4,7% of world production Deficit in 2009 = 5,5 Mil Tonnes of milk Small dairy herds – Average herd size less than 4 – Global average less than 3 – South Africa exception 350 cows in milk Largely subsistence farming Low % milk to processors Production estimates optimistic

13. 1 830 commercial dairy farms Many small non-commercial farmers Milk production 2 700 million litres – Production per farm = 3 650 litres per day – Larger farms (> 5 000 litres/day produce 50% of milk Secondary industry – 5 large and 160 other milk buyers/processors – 130 producer-distributors (distribute own milk) Concentrated retail sector – 4 retailers handle 75%+ of total sales Structure of SA dairy industry

14. Products – 60% Liquid – 40% Concentrated products Free market system – Relatively low import tariffs – Various trade agreements – No national quota systems – No pricing structure – No minimum prices – In many cases no contracts! – No subsidies Structure of SA dairy sector

15. Geographical distribution Source: MPO

16. Herd size distribution Average cows in milk = 365

17. Size distribution per province

18. Three production systems – Total mixed ration systems – Pasture –based systems – Mixed systems Production systems

19. Feedlot or Free-stall barn – Generally larger herds – High production 35 kg + – Roughage Maize and other silage Lucerne (alfalfa) Other hay – Concentrates Maize Soybeans Other Feed 350 g. to 400 g/ kg milk Trend towards housing in barns Total mixed ration systems

20. Grass/clover mixtures – Mostly irrigated pastures – Larger herds – Production 20 kg – 25 kg Concentrate fed in milking parlour – Maize/soybeans +other – 200 g. – 250 g. concentrate per kg milk – Individual feeding with sensors 750 Kg MS per hectare Pasture-based system

21. Mixed farms in inland areas – Dry-land crop production – Beef/mutton/wool farming – Smaller herds – Decreasing number of producers Pastures + feedlot + concentrates Mixed system

22. Trends Production growth Demand growth Export growth – Net exporter since 2009 Volatile producer and feed prices

23. Milk:feed price ratio

24. © IFCN Dairy Research Center 2014 Countries’ milk price situation in 2013 Combined IFCN world milk price indicator 2013: 50.6 USD/100kg ECM

25. Changes in population

26. Summary African market is growing Global companies already active Danger for Africa: – Reconstituting milk from solids – Dumped products disguised as food aid. SA milk producers – Large, highly efficient Well developed secondary industry