Leading dairy processing group Parmalat South Africa, announced that a price increase of 15 cents a litre will be paid as from 1 February 2007 to members of the Southern Africa Milk Co-operative (Samilco) who supply milk to them.

Agreement was reached with Samilco this morning. Samilco represents dairy farmers supplying more than 90 percent of the annual milk requirement of Parmalat of over 400 million litres. The increase is based on an average price as milk prices vary according to quality and solids content.

Parmalat chief executive officer, Theo Hendrickse expressed his concern and recognition that the agricultural sector was generally under pressure, with farmers being hit by the rising costs of feed, fertiliser, fuel and wages.

"Based on the latest information available the year-on-year inflation rate for dairy products is only 3.92 percent compared to that in the total food category of 7.14 percent over the same period. Within the basket of dairy products, some sub categories, for instance UHT (long life) milk realised a price deflation."

These actions by Parmalat are taking place against tough competitive conditions in the market.

Sapa

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