PR - Factors Influencing The Long-term Competitiveness Of Commercial Milk Producers In South Africa

This study investigates factors influencing the long-term competitiveness, based on a unit cost ratio analysis, of 11 commercial milk producers from East Griqualand (EG), South Africa, using unbalanced panel data for the period 1990 – 2006. Results of a Ridge regression analysis show that dairy herd size, the level of farm debt, production per cow, technological and policy changes over time, and the proportion of trading income to total milk income influence the long-term competitiveness of these milk producers. To enhance their competitiveness in a deregulated agricultural market, relatively small and profitable EG milk producers should consider increasing herd sizes as the importance of herd size in explaining competitiveness suggests that size economies exist. All EG milk producers should also consider utilising more pasture and other forages to lower production costs and select dairy cattle of superior genetic merit to improve milk yields.

Keywords: Milk production; South Africa; competitiveness; panel data