The African dairy scene
Koos Coetzee
Milk Producers’ Organisation
September 2014
Geographical orientation
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Contents
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The dark continent awakens
Dairy situation in Africa
Dairy situation in South Africa
Challenges for dairy development in Africa
Demographics
• Population
– 1,033 billion in 2013 (second highest continent)
– Highest population:
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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
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
Demographics
• Urbanisation
%
– Largely through rural – urban migration
90
80
70
60
50
40
30
20
10
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Sub Saharan Africa
Africa
South Africa
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
Income growth
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Fast economic growth
Wealth concentrated in few hands
Growing food demand
Met by imports
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
International involvement
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Danone/ Brookside
Parmalat
Nestlé
Campina
Fonterra (CFI)
Dairy farming in Africa
Dairy statistics, selected African countries, 2010
Country
Algeria
Egypt
Cameroon
Ethiopia
Kenya
Morocco
Nigeria
South Africa
Sudan
Uganda
Rwanda*
Milk
production,
Number of
Number of
Production
2010
dairy farms
dairy cows
growth (%)
mil.t. ECM** ('000)
1000 cows
2006-2010
1.5
20
822
0.8
6.3
975
3 600
1.7
0.1
4.03
270
0
3
22 456
9 628
6.1
3.9
1 725
6 904
2.8
2.2
261
1 835
7.5
0.5
325
4 252
1.4
2.8
5.6 ---1.2
0.35 ----
2.6
530
14 450
4 293
1 663
----
2.6
0.2
5.5
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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
Structure of SA dairy industry
• 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 sector
• Products
– 60% Liquid
– 40% Concentrated products
• Free market system
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Relatively low import tariffs
Various trade agreements
No national quota systems
No pricing structure
No minimum prices
In many cases no contracts!
No subsidies
Geographical distribution
Source: MPO
Herd size distribution
Average cows in milk = 365
35.0%
30.8%
30.0%
26.7%
25.7%
% of herds
25.0%
23.3%
20.6%
21.3%
20.0%
15.0%
13.9%
12.6%
13.4%
11.7%
10.0%
5.0%
0.0%
1 - 50
51 - 100
101 - 200
Number of cows in herd
2009 2012
201-300
> 300
Size distribution per province
Eastern Cape
Kwazulu Natal
Average
Gauteng
Western Cape
Limpopo
Northern Cape
Mpumalanga
Freestate
Northwest
0
100
200
300
400
Number of cows in milk (2012)
500
600
Production systems
• Three production systems
– Total mixed ration systems
– Pasture –based systems
– Mixed systems
Total mixed ration systems
• Feedlot or Free-stall barn
– Generally larger herds
– High production 35 kg +
– Roughage
• Maize and other silage
• Lucerne (alfalfa)
• Other hay
– Concentrates
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Maize
Soybeans
Other
Feed 350 g. to 400 g/ kg milk
• Trend towards housing in barns
Pasture-based system
• 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
Mixed system
• Mixed farms in inland areas
– Dry-land crop production
– Beef/mutton/wool farming
– Smaller herds
– Decreasing number of producers
• Pastures + feedlot + concentrates
Trends
• Production growth
• Demand growth
• Export growth
– Net exporter since 2009
• Volatile producer and feed prices
Milk:feed price ratio
2.2
Melk/voer prysverhouding
2
1.8
1.6
1.4
1.2
1
0.8
Countries’ milk price situation in 2013
Milk price in 2013
US-$/100 kg ECM
Combined IFCN world milk
price indicator 2013:
50.6 USD/100kg ECM
> 60
> 50 <= 60
> 40 <= 50
> 30 <= 40
> 20 <= 30
<= 20
no data
© IFCN Dairy Research Center 2014
Changes in population
50.00%
45.00%
40.00%
% of adult population
35.00%
30.00%
+70%
+23%
- 69%
25.00%
20.00%
+36%
15.00%
10.00%
5.00%
0.00%
LSM 1 - 3
LSM 4-5
2001
2003
2005
LSM 6 - 8
2007
2009
2011
LSM 9 - 10
2012
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