Milk production up 5.4% in February

The organisation said in a statement that since the previous issue of market signals, there were further reports of producer price increases.

"While the increase in producer prices brings some relief to farmers, it will probably not result in a sharp increase in production in the coming autumn and winter," MPO chief economist, Koos Coetzee said.

The recently released figures show that the strong growth of the dairy market continued during 2011.

The fastest growing categories in the retail market were pre-packed cheese (+17.8%) and UHT milk (+10.6%).

Higher production in Oceanic countries and prospects of higher European production, as well as weak demand in developed countries, had a negative effect on international product prices.

International producer prices were slightly down in December compared to the same month a year earlier, mainly caused by rand strength, with the exception of US prices (23% increase).

The total imports during 2011 increased by 23% and the total exports by 39%, resulting in a slight increase in net imports. Exports grew steadily during 2011 and indications are that this will continue.

In January 2012 dairy products equivalent to 15.7 million litres were imported and 9.7 million litres exported.