South Africa’s dairy industry set for growth in 2025 despite past challenges

SOUTH AFRICA – South Africa’s dairy industry is poised for a rebound in 2025, with improving economic conditions expected to drive growth, according to a USDA Foreign Agricultural Service (FAS) report. 

Despite facing significant hurdles over the past five years, including harsh weather and disease outbreaks, the sector is showing signs of recovery. 

FAS/Pretoria forecasts a 2% increase in unprocessed liquid milk production this year, fueled by declining feed costs and rising consumer demand. 

Additionally, U.S. dairy exports to South Africa, such as lactose, whey, and cheese, are projected to rise by 10% due to increased spending power among consumers.

The country’s commercial dairy herd, estimated at 1.27 million head, consists mainly of Holstein and Jersey breeds. 

Over the past decade, the industry has struggled with falling productivity per cow, driven by high feed costs and unfavorable climate trends. 

A report by FAS notes that the number of dairy farmers has dropped by 60% as a result, with many exiting the sector. 

Last year’s foot-and-mouth disease outbreak further disrupted production, particularly in key dairy regions. However, with conditions now improving, milk output is expected to climb in 2025.

Rising disposable income and easing inflation are shifting dairy processing trends, boosting demand for products like long-life milk, cheese, and fermented goods. 

Exports to China are also set to grow by 10%, thanks to a new trade protocol. “We’re seeing a real opportunity to expand into international markets,” said a spokesperson from Milk South Africa (Milk SA), the nonprofit representing the industry. 

Domestic consumption is on the rise too, with retail sales of ultra-high temperature (UHT) milk, cream cheese, and butter jumping between July 2023 and July 2024, reflecting broader appeal across income groups.

Imports of UHT milk are expected to plummet as local production ramps up, though luxury cheeses and butter from the European Union will continue to arrive. 

The U.S. remains a key supplier of dairy products like whey and buttermilk, with exports forecasted to increase this year. 

South Africa, which primarily exports dairy within the Southern African region, is now eyeing China as a growing market.

Reported by Milk SA, the dairy sector is South Africa’s fourth-largest agricultural industry, generating R25 billion (US$1.3 billion) in 2023 and employing over 100,000 people directly and indirectly.

 Despite past setbacks, including a drop in average milk yield from 21 liters per cow per day in 2018 to 16.1 liters in 2023, optimism is growing. 

“With feed costs easing and new trade deals, we’re hopeful for a strong year,” a dairy farmer from Northern South Africa told FAS/Pretoria. 

Some farms using advanced feeding methods are already achieving yields of up to 45 liters per day, signaling a brighter future for the industry.

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