South African dairy growth predicted by FAS
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South Africa’s dairy industry is likely to grow in the future due to improving economic factors, despite suffering from many weather and disease related challenges in the past five years, a report from the USDA Foreign Agricultural Service notes. In 2025, FAS/Pretoria forecasts unprocessed liquid milk production to increase by 2% on declining feed costs and forecasts US dairy exports to South Africa (including lactose, whey, and cheese) to increase by 10% on increased consumer spending power.
The South African commercial dairy herd is estimated at 1.27 million head, predominantly Holstein and Jersey. Due to price pressure and unfavourable feed and climatic trends the past decade, per cow productivity has fallen and the dairy industry has undergone significant consolidation: the number of dairy farmers in the country has declined by 60%. A foot and mouth disease (FMD) outbreak also affected dairy cattle in 2024. However, with improving conditions, milk production is forecast to increase in 2025.
Dairy processing trends shift with consumer disposable income and inflation, conditions that are starting to improve in South Africa. Demand is also expected to increase for processed products for export to China following a new trade protocol. Long life and sterilised milk, cheese, and fermented products are the top processed dairy products. Powdered milk, cream cheese, sweetened/flavoured/coloured milk, and whey powder demand are expected to increase by 4% in 2025. Between January and September 2024, unprocessed milk used for processing of sweetened flavoured or coloured milk increased by 9% compared to the same period in 2023, while utilisation of unprocessed milk for manufacturing of powder milk increased by 48%.
Domestic consumption of dairy products varies by income group. Between July 2023 and July 2024, retail sales of ultra-high temperature (UHT) milk, cream cheese, and butter increased more than other dairy products, suggesting increasing consumption among both lower and higher income groups.
With higher production, imports of UHT milk are forecast to fall precipitously. Most imports from the EU are luxury cheeses, butter, and cream. The US exports lactose, milk albumin, whey, malt extract, buttermilk and cheese to South Africa, which are forecast to increase by 10% in 2025. South Africa exports mainly within the Southern African region but is expected to increase exports to China by 10% due to the new dairy protocol.
The South African dairy industry is the fourth largest agriculture sector in South Africa, with a gross value of production of approximately R25 billion (US$1.3 billion) in 2023. The country accounts for 0.4% of global milk production, with over 984 milk producers employing 60,000 farm workers and providing an additional 40,000 people with indirect jobs within the dairy value chain.
The dairy industry is represented by Milk South Africa (Milk SA), a nonprofit organisation and a member of the International Dairy Federation. Milk SA was established in 2002 to represent the common interests of all the primary dairy producers and processers in South Africa.
FAS/Pretoria forecasts that unprocessed liquid milk production will increase by 2% in 2025 on declining feed costs and expectations of increasing demand driven by new trade opportunities with China. Feed costs are expected to improve in the second quarter of 2025 when maize harvest begins. Unprocessed milk production for 2024 is estimated to increase by 1% as a result of weak consumer purchasing power affecting demand and an impact in supply caused by the foot and mouth disease outbreak, which affected one of the biggest dairy producing regions in the country.
South Africa’s average milk production per cow per day stood at 16.1 litres in 2023, a decrease from 21 litres in 2018 due to heat stress, escalating production costs, and exit of farmers out of the industry. FAS/Pretoria met with industry contacts who shared that cross bred Holstein-Jersey cows can currently produce 18-20 litres per day while some Holstein dairies in Northern South Africa that are under a total mixed ratio feeding can produce 40-45 litres a day.
