Vaivém: Milk price is on the rise in the world, but does not encourage producers

The world supply of milk remains restricted, which should hold prices at high levels. The world supply of the powdered product this year is 3.3% lower than the previous year, and prices are up 14% in Europe, one of the main producing regions.

The rise in prices is bad for the consumer, mainly because there is already an acceleration of all foods, but it also does not solve the problems of producers, who are investing less and will have to deliver a smaller volume of milk to the market.

Prices should encourage the producer to increase production, but a series of factors raise doubts in the sector. Even with high values, profit margins are low, which applies to both Brazilian producers and those from other dairy regions.

Production costs are high due to the recent appreciation of grain, the increase in energy and transport. In addition, the dry climate affects the pastures.

In this period of intense heat, which occurs in all producing regions, the productivity of cows falls and the fat content of the milk decreases, according to the evaluation of agricultural technicians from the European Commission.

The main world producers are expected to put 287 million tons of milk on the market this year, 1% less than the previous year, according to the USDA (United States Department of Agriculture).

The European Union, which produces 142 million, will have a 2% reduction in supply. Argentina will be one of the few countries to increase production, but the country’s volume is 12 million tons, well below that of the European Union and the United States (103 million).

Economic factors also weigh on the sector’s decision, when evaluating a possible increase in production. High costs are already built into production, but consumer demand and income are still uncertain, given the prospects of weaker global economic activity.

Higher prices boosted the business of the world’s leading companies. In 2021, the 20 largest companies in the sector, one of the most important in the food sector, had sales of US$ 235 billion (R$ 1.216 trillion), 9.3% above the previous period.

The five largest – Lactalis, Nestlé, Danone, Dairy Farmers of America and the Chinese Yili – were with US$ 106 billion (R$ 548.7 billion), according to a report released by Rabobank this Wednesday (17).

Brazil, in addition to the internal factors that affect prices, is also influenced by the external market. In the last 12 months ending in June, Brazilian dairy imports grew 17.5%. Exports fell by 59.1%, according to a follow-up by Cepea (Center for Advanced Studies in Applied Economics).

The reduction in product supply in Brazil made the price of long-life milk accumulate a high of 72% this year, according to Fipe (Fundação Instituto de Pesquisas Econômicas).