MILK PURCHASING MODEL
Milk purchases are done according to the following principles:
Butterfat is purchased on a rand per kilogram basis and the minimum required butterfat content of raw milk is 3,30%
Payment for protein is included in the payment for “volume and other solids” and the minimum required protein content of raw milk is 3.00%
VOLUME, PROTEIN AND OTHER SOLIDSEach region has a unique cent per litre value for volume, protein and other solids. DFSA does not service producers who supply less than 500 litres per day.
Density premiumThe density premium is a stimulus to retain and develop raw milk as close as possible to the manufacturing facilities. Distance therefore carries a weight of 70 % and volume a weight of 30%. The distance is calculated to the nearest manufacturing facility, based on road distance.
The ideal milk has a bacto count of lower than 200 000/ml and a somatic cell count below 400 000/ml. A sliding scale premium and penalty system encourages producers to supply milk with the best possible quality.
In addition to the above tests, DFSA also regularly tests for added water and inhibitors in milk. DFSA provides a service to producers by regularly testing for brucellosis by means of the milk ring test and determining the milk urea nitrogen content for ration balancing purposes. These tests are done at Mérieux NutriScience, an independent world class laboratory.
Market perceptions are extremely important to DFSA and due to negative consumer perceptions of the use of hormones, DFSA does not purchase milk from herds treated with rBST. All DFSA producers are required to sign a declaration where they undertake not to supply DFSA with milk coming from cows that were treated with rBST.
DFSA'S DELIVERY AGREEMENT
Delivery Agreements are freely traded within regions. A-Delivery Agreement is a right to supply a certain volume of milk to DFSA and can be traded or inherited. Producers can acquire A-Delivery Agreements by purchasing it from existing DFSA producers. B-Delivery Agreements are used to balance milk supplied under A-Delivery Agreements with the total demand for raw milk.
DFSA's Supply ContractsA Supply Contract is awarded only if the Delivery Agreement producers cannot supply DFSA’s demand for raw milk in full. Producers and DFSA commit themselves to a fixed period and supply volume, when they sign a Supply Contract. The duration and volume linked to such a Contract will be determined by market conditions. Supply Contracts are not tradable or transferable between producers.
Conditions for the Transportation of MilkTo make the transportation of bulk milk by DFSA as effective and economical as possible, there should be good co-operation between DFSA and the milk producers. A decent turning circle, good infrastructure, ample bulk tank capacity and proper cooling is of utmost importance. Milk will only under highly exceptional conditions and with prior authorisation, be loaded if its temperature is higher than 5°C. Milk that does not pass the applicable Alizarol test, will not be collected.
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