Milk and dairy prices will rise "a lot" this year amid expected shortages, the Milk Producers' Organisation warned on Thursday.

Prices could go up as much as 20 to 30 percent, said MPO managing director Bertus de Jongh.

"The price increase will likely start in March and heighten in winter," he said.

De Jongh said low producer prices in the past two years were behind the local shortage of milk. These had forced as many as 30 dairy farmers a month out of the industry, he said.

Contributing to this were higher meat prices. "At present it is more profitable to slaughter dairy cows than to milk them," said De Jongh.

Internationally prices were also on the up, because of shortages caused by the drought in Australia and normal cyclical economic conditions.

The weaker rand made it expensive to import dairy products to supplement milk shortages, said De Jongh.

On Wednesday, Parmalat announced that it would pay Southern Africa Milk Co-Operative members 15 cents a litre more from 1 February.

Parmalat depends on the co-operative's dairy farmers for more than 90 percent of the 400 million litres of milk a year it needs.

Sapa

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