Milk price is record in the field and pressures consumer

With the impact of rising costs in the field, the average price of milk paid to producers hit a record in the country in March, indicate data from Cepea (Center for Advanced Studies in Applied Economics).

According to analysts, the effect of the increase is not limited to the initial stage of the production chain. The advance also reduces profit margins in the industry and returns to pressure the pockets of consumers in cities.

In March, the price of a liter of milk paid to producers was R$ 2.2104 on average in Brazil, according to Cepea. This is the highest value for the month in the institution’s historical series, which began in 2005, in real terms — that is, discounting inflation.

The price is 4.1% higher than in the same period last year. The amount paid is related to the milk collected in the previous month — in this case, February.

According to Cepea, the increase does not translate into high gains for producers. It is because, according to the study center, the advance is mainly due to the high costs, which has been limiting investments in the activity and, consequently, the supply potential.

From January to February, the Cepea Dairy Uptake Index reflected this scenario. There was a drop of 0.63% in the offer of the product.

“We observe high costs for producers, industry and consumers. Nobody is making money from this”, says Cepea researcher Natália Grigol, who follows the sector.

The costs of producing milk and dairy products gained strength in the pandemic with the appreciation of commodities such as corn and soy, recalls the researcher. Grains are used as inputs for animal feed.

If that were not enough, the sector was also affected by the adverse weather effects in recent months.

The Southeast region had episodes of excess rain, while the South began to suffer a period of drought. The extreme phenomena punished different crops, including pastures and corn.

“It’s a pressure of costs in a context of very delicate consumption”, says Grigol, referring to the fact that high inflation and low income challenge the growth of demand for dairy products in the country.

Spending was also higher outside rural properties. The costs of transporting milk to the industry, for example, are impacted by the fuel surge.

In the factories, there were still pressures coming from the high of the electric energy and the advance of the prices of the packages.

“A series of factors has been impacting. The increases in soybeans, corn, oil and electricity mean a lot in the production of milk and derivatives”, says Cláudio Meirelles, president of the Cooperativa de Barra Mansa, in the state of Rio de Janeiro.

According to him, industries in the sector have been operating the sale of milk with margins “in the red”, due to high costs.

“The consumer is in debt. He has no more room for large increases”, says Meirelles.

Final prices rise again

The IPCA-15 (National Index of Consumer Prices Extended 15) shows that the inflation of milk and dairy products had even given signs of a truce for the Brazilian between the end of last year and the beginning of 2022.

After a sequence of seven highs, there were three consecutive declines in prices in November (-0.49%), December (-1.55%) and January (-0.52%).

However, milk and dairy products rose again in the last two months, according to the index, which is calculated by the IBGE (Brazilian Institute of Geography and Statistics). There were increases of 1.51% in February and 1.76% in March.

Long-life milk was the product with the biggest increase last month: 3.41%. Then come butter (2.49%), fermented milk (2.19%) and yogurt and dairy drinks (1.38%).

In March, 12-month inflation for milk and dairy products returned to the double-digit range, which had not occurred since August last year. In comparison with February, the accumulated increase jumped from 7.29% to 10.32%, according to the IPCA-15.

In the last 12 months, the biggest advances were those of requeijão (18.2%), yogurt and dairy drinks (16.66%) and cheese (13.26%). Long-life milk rose 7.47% in this cut.

“The sector has very pressured costs”, highlights researcher Felippe Serigati, from the FGV Agro study center.

In his view, there are uncertainties about the behavior of prices for the consumer in the coming months.

The analyst recalls that the beginning of the war between Russia and Ukraine, in the final stretch of February, generated an increase in commodity prices on the international market.

The advance of goods such as corn can cause new impacts on milk production costs, according to Serigati. On the other hand, the dollar has been showing signs of a truce in recent weeks, which could ease pressures.

Coffee with milk and bread and butter are all more expensive

In addition to milk, coffee has also become more expensive for Brazilians, as shown by the sheet in February. In the view of analysts, the high price reflects the context of firm global demand and supply impacted by last year’s drought and frost in Brazil.

In March, ground coffee had an inflation of 2.86%, according to the IPCA-15. In 12 months, the product accumulated a surge of 62.36%.

And, in addition to butter, bread also rose in prices, especially after the invasion of Ukraine by Russia, two of the main wheat producers in the world.

The war raised prices on the international market, with an impact on the Brazilian market. At the beginning of March, the ton of wheat reached R$ 1,722 in Paraná, a value that accumulates high 80% in two years.

The prices of bread rolls and wheat flour, which had been falling at the end of 2021, rose again. In the second quadrissemana of February (last 30 days until the middle of the month), French bread had a readjustment of 1.2%, and flour, 1.4%, percentages well above those of December.

This resumption of prices for wheat flour and bread rolls occurred after an accumulated increase of 23% and 19%, respectively, in the last two years for these products, according to Fipe (Fundação Instituto de Pesquisas Econômicas).