Commodities Shuttle: Rising in the field, milk pressures inflation rate

Milk is one of the most important products in the Fipe Consumer Price Index (Economic Research Institute Foundation). In the last 30 days ending on the 22nd of this month, it rose 13%.

The pressure will continue. Prices are high in the field, a rise generated by rising input costs. Last year, it was grains, which stopped rising, but are still at a high level. Now, the pressure comes from fertilizers and other inputs.

“The producer has seen the margins get narrow for several months and turns around as best he can to close the accounts”, says Natália Grigol, a researcher at Cepea (Center for Advanced Studies in Applied Economics).

The costs in the field have increased a lot, with readjustments mainly in the feeding of the animals. In addition, energy and transport play a big role in the sector, as well as food supplementation, which depends on the dollar.

The La Niña effect on pastures makes animal feed even more dependent on grains, which should occur mainly in this off-season from April to September.

All this led the producer to reduce short-term and long-term investments. Reduction in the costs of feeding and culling cows caused a reduction in milk supply. From February 2021 to February 2022, milk intake was 8% lower in the country.

This reduction in the supply of raw materials in the market caused a greater dispute between the industries. In the first week of this month, the liter of milk was R$ 2.54 in the so-called spot market —negotiations between industries. In the second fortnight, it rose to R$3.02, up 19%.

In addition to the cost of raw materials, industries are also absorbing the rise in energy and packaging prices. There were transfers to consumers in March, but this month, they are more complicated, says Grigol.

As if the problems of internal costs were not enough, the dairy activity depends on the global market. Prices are at high levels, the war interferes in the market and inputs should not have a price reduction in the short term. It is a new situation, says the Cepea researcher.

The exchange rate also interferes in this market. It favored exports in the first quarter, but as of this month, they begin to fall. The appreciation of the real makes the Brazilian product lose competitiveness. On the other hand, if the dollar falls, it facilitates imports.

Devolution Embrapa’s social profit in 2021 corresponded to R$ 82 billion. As a result, for every BRL 1 in the budget, the company returned BRL 23.4 to society, according to Celso Moretti, president of the entity.

Devolution two In the last 25 years, the social profit generated reached BRL 1.2 trillion, a value slightly above the GVP (Gross Production Value) of agriculture in 2021. On average in these years, for every BRL 1 in the budget, there was a return of R$ 12 for society, says Moretti.

Job According to the president of Embrapa, this generation of social profit allowed the creation of 1.6 million jobs in the last 18 years.

technologies The most important of the period were the biological fixation of nitrogen, the agricultural zoning of climatic risk and the cultivation of marandu grass. Together, they generated R$ 668 billion.

partnerships The company launches the first living laboratory in Jaguariúna (SP), AgNest. It will have as its goals the search for new ideas, innovations and application of science in the promotion of agriculture.

partnerships two Bayer, Banco do Brasil, Nutrien Soluções Agrícolas and Jacto will also be in this laboratory. Embrapa and these companies will work together to develop solutions. They will have joint ownership and, when the product is on the market, they pay royalties to Embrapa.