A Lactalis milk price cut of 70 cents a litre, about 10% of what the processor pays farmers, is pushing dairy producers in the Eastern and Western Cape towards losses and could drive some out of the industry, according to André van Heerden, chief executive of dairy cooperative Samilco. He set out the warning in a report published by BusinessTech on 19 October. Lactalis, which owns the Bonnita and Parmalat brands, is one of the country’s biggest buyers of raw milk.
How the cut is being applied
The 70 cents is not a single reduction. Eyewitness News reported on 14 October that Lactalis lowered its raw milk price by 20 cents a litre in September and by another 20 cents in October. A further 30-cent cut has been proposed for November, which would bring the total reduction for the year to 70 cents a litre.
Samilco and its legal representatives are in talks with Lactalis to have the latest decision reconsidered, according to the EWN report. Samilco described the situation as an industry crisis and said the cuts are already putting pressure on farmers in the Eastern and Western Cape.
What Samilco says
Van Heerden said most of the farmers Samilco represents are already operating at a loss. “Most of these guys are running at a loss, especially when it’s a 70-cent reduction,” he told BusinessTech.
He linked the price cut to a surplus of milk in the market. His argument, according to the report, is that if the cut is meant to clear that surplus, retail prices on the shelf should come down as well. Producers have also lost some export contracts in the Middle East, particularly in Saudi Arabia, which has left more milk competing for space in the local market. The BusinessTech report put the number of dairy parlours at about 144, down from more than 200.
Samilco has taken its concerns to the Competition Commission and is considering legal action under competition law. Van Heerden also warned that if many dairy farms close, South Africa could end up relying more on imported milk, and that shipping, import and transport costs would then likely push prices up for consumers.
What Lactalis says
Neither the BusinessTech nor the EWN report carried a response from Lactalis, and we could not find a public statement from the company explaining the cuts or confirming whether the November reduction will go ahead. The reasons for the cut given in this article are Samilco’s reading of the market, not the processor’s.
What the producer data shows
Fanie Ferreira, chief executive of the Milk Producers’ Organisation (MPO), told The Money Show that the average South African dairy farmer milks about 700 cows, EWN reported. He said one of the MPO’s largest members, in the Tsitsikamma area, would lose about R12 million over a year if the cut continued. Ferreira added that the cuts arrive as farmers recover from the foot-and-mouth disease outbreak, and that some regions have few milk buyers, which leaves farmers with little choice of where to sell.
The wider numbers explain why a 70-cent cut lands hard. Milk SA figures cited in our 14 October report on dairy farmers cutting costs to the bone show 879 milk producers in January 2026, down from 1,053 in January 2021. The average farm-gate price was R7.06 a litre in 2025, with a preliminary February 2026 figure of R7.17, so a 70-cent cut takes roughly a tenth off a farmer’s income per litre.
The same data shows output per producer rising sharply as farms consolidate, and South Africa a net dairy exporter for a second year in 2025, with exports up 31% to 70,000 tonnes. That makes the loss of Middle East contracts more significant: milk that was leaving the country now has to find a buyer at home.
What comes next
The immediate question is whether Lactalis proceeds with the proposed 30-cent November cut or reconsiders it after talks with Samilco. We found no public comment from the Competition Commission on Samilco’s complaint. For farmers already running at a loss and still recovering from foot-and-mouth disease, the outcome will decide how many keep milking into 2027.
