Abstract:
South African milk producers supply around 8.4 million litres of milk per day. The monetary
value of this supply results in a contribution of approximately 6.7% to the gross value of
agricultural production. In 2015 producer income was estimated at R14 900 million with an
investment capital of around R32 500 million. In South Africa the dairy industry is the fourthlargest
of all agricultural industries, creating approximately 20 000 sustainable job opportunities,
excluding up and downstream opportunities (MPO, 2016).
Both small and large businesses are affected by global trends that are the driving forces behind
major changes in the dairy industry. Agri-businesses and farmers are exploring methods to
change their strategies, business models and production systems to be able to sustain their
competitiveness in the global market. Entry barriers to the global markets and local industry are
capital intensive, costly and complex (OABS, 2014).
In South Africa the tendency exists where the larger commercial dairy farms are expanding by
incorporating smaller farming units. This tendency exists in most countries around the world.
This trend will certainly increase the entry barriers for establishing black commercial dairy
farmers, despite the pressure of transformation in South Africa. In fact, they would be at greater
risk of business failure compared to their more established counterparts in the formal sector due to the lack of access to critical resources and relevant experience. Therefore, alternative business
models should be evaluated and implemented to assist with the establishment of black
commercial dairy farmers in South Africa.
Kirsten and Sartorius (2002) referred to the formation of partnerships between small-scale
farmers and thereby increasing their marketing power and enabling them to compete against
large-scale farmers. These partnerships would allow the smaller farmers to enjoy the same
benefits that their larger counterparts enjoy, as well as reduce managerial inputs required and
transaction costs.
Milk SA (2014) refers to various success stories of transformation in the primary dairy industry.
All of these success stories are based on share-milking agreements, hence the research on how
share-milking contributes to the successful establishment of black commercial dairy farmers.
The availability of suitable land for dairy production where emerging farmers can be established
is also becoming a major constraint. Suitable coastal land will become exhausted; therefore, there
is a need for alternative models to establish emerging farmers. Both communal land and privately
owned land are currently being used for share-milking projects.
The primary dairy industry is not excluded from the proposal stating that all commercial farmers
should cede 50% of their land to farmworkers; hence Agri SA's proposal and presentation to the
Department of Rural Development and Land Reform (DRDLR). According to Agri SA (2015),
proposals should:
● "comply with the Constitution of South Africa;
● give full recognition to economic and market actualities;
● not necessarily be dependent on state support; while
● utilising the potential of private-public partnerships as far as possible;
● adhere to the NDP framework" (Agri SA, 2015).
Agri SA (2015) referred to the share-milking scheme at Reebok Rant as an alternative to the
50/50 proposal from Government.
