Struggling Eastern Cape dairy farmers fighting to survive a devastating drought were dealt a further body blow this week when major buyer Parmalat announced it was slashing the price it pays for their products.
Some believe it could be the final straw that will make bankruptcy unavoidable.
And while farmers who sell to Parmalat in the west of the region battle the imminent drop of 30 cents a litre, which comes into effect on July 1, those in the East London area have been dealt a further blow, Parmalat deems the area no longer viable and plans to stop collecting milk from dairy farmers in the area who currently sell 20000l a day to Parmalat.
On Thursday, the Milk Producers' Organisation (MPO) and the Samilco Agricultural Co-operative met in vain to urge Parmalat to reverse its decision, which has many in the industry flummoxed as winter is traditionally the time when milk prices increase.
Further confounding farmers is that other buyers have not decreased their prices and have not announced any intention of doing so.
According to industry insiders, Parmalat's recent decision to withdraw from selling milk to supermarkets for its no-name brands, and instead focus on growing profitable niche brands, has resulted in the company sitting with a massive milk surplus, the real reason behind the drop.
But Parmalat, a major buyer in the region along with Clover, has stood by its decision.
Spokesman Karen Geldenhuys said: Factors taken into consideration by the company include the weak current market demand for dairy products, producer price inflation comparisons for the dairy sector, milk flow, the influx of cheaper imports ... and the weak export opportunities available to local milk processors.
Regarding the exiting of the deal with supermarket no-name brand milk, called dealer- own-brand, she said: Parmalat exited the (deal) in September (last year), so no, this decision is not linked to that.
According to company chief executive Nick Wentzel, it had no alternative but to reduce the milk price given all of these unfavourable conditions.
We constantly monitor the situation and will review our decision if market conditions recover."
"Parmalat, as well as other players in the food processing industry, has been hit hard by large increases in our input costs, he said.
The hard line is no consolation to farmers entering what forecasters predict could be a dry winter.
The drop is against market trends, said Paterson farmer Colin Lovemore.
Other buyers went up between 20c and 25c in March and are now getting between R3 per litre and R3.30/l of milk.
On average, medium-sized dairies selling to Parmalat will be getting between R2.70/l and R2.90/l after the price cut.
While farmers have the choice to switch to other milk buyers, Lovemore said rival companies already had a full quota of sellers.
The extended drought and this 30c drop is going to cause bankruptcies among a lot of farmers, says Lovemore.
Input costs have risen way above inflation. For me to produce milk in this drought is costing me R3.15 (per litre), and I haven't got that price for at least three years now."
I won't make it through this winter unless it rains soon and we (farmers) can start producing our own food on our farms."
"If I don't make it, then 19 families will have no source of income.
Samilco East London representative Jack Willows said that although Parmalat deemed the area no longer viable to collect milk from, the co-op was in delicate meetings with the firm to phase out the pull-back slowly.
There are a very limited number of buyers in the area, but there is a new milk factory, Sunningdale Dairy, being constructed in the East London industrial development zone."
"I'm trusting Parmalat will work with us to try and dovetail the withdrawal and Sunningdale absorbing the producers in the area.
But Willows added: You can't just cut off the milk from one factory and sell to another. The new factory must still create a market and we need Parmalat to give us time to absorb the amount of milk that will be left here."
"At the moment in East London, we don't have any other buyer.
Cradock farmer Freddie van Zyl, the provincial MPO chairman, said the drop was very disappointing and against international market trends which saw farmers receiving more for their milk.
There seems to be no fundamental reason for the drop in price and this drought is crippling farmers, he said. - I-Net Bridge