The rise in the price of long-life milk has become one of the most talked about topics on social media after the liter started to be found in markets and bakeries in Brazil between R$7 and R$10 in recent weeks.
“For the love of God! Can anyone explain to me what is happening? Why the hell was milk twice the price in a week?”, asked an internet user on Tuesday (28).
“My mother screamed today in the middle of the market when she saw the price of milk. It’s not a lie. It was almost R$9”, wrote a profile on Twitter on Monday (27).
The price of milk usually goes up during the off-season, which runs from April to June, according to the Center for Advanced Studies in Applied Economics (Cepea). That’s when the drier climate impairs the availability and quality of pastures.
However, this year, dealing with the off-season became even more complicated for the producer, which reflects on prices in the markets, says Cepea researcher Natália Grigol. She points out two more reasons for the high milk supply:
- the effects of the La Ninã phenomenon, especially at the end of last year and beginning of this year;
- and the increase in production costs.
THE La Niña is a weather phenomenon what happens when there is a cooling of the waters of the Pacific Ocean, affecting South America and, in the case of Brazil, decreasing the rains in the South and increasing them in the Center-Northaccording to the agrometeorologist and director of the consultancy AgroClima, Marco Antônio dos Santos explained to the g1 in January.
The event, which usually occurs interspersed with El Niñoalready is in its second year in a rowsurprising producers hoping to recover from the 2021 drought.
“The drought at that moment (at the end of last year and beginning of this year) reduced the quality of the silage that is offered to the animals, affecting the performance of the activity today”, says Natália.
“Another point that is extremely important because it affects the entire production structure is the increase in production costs”, points out the researcher. “According to Cepea, the Effective Operating Cost of the activity has been on the rise in the last three years and only in this last month is it starting to show a reversal of this trend.”
Natália also points out that, during this period, the inputs that weighed the most for the producer were: animal feed — because of the appreciation in the grain market — the increase in grain exports and the drop in domestic availability, mineral supplements, fertilizers and the fuel.
“All animal feed has become more expensive in recent years. Both concentrated feed (feed) and forage (pasture) were affected by the rise in fuel and fertilizers. This led many ranchers to leave the activity or to reduce investments”.
“As a consequence, the productive structure now faces difficulties to raise the level of supply, and producer prices have been rising since January”.
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According to the Extended National Consumer Price Index 15 (IPCA-15) of June — considered the preview of the country’s official inflation — the increase in the price of milk began to be registered from February to March:
- February: 1.04%
- March: 3.41%
- April: 12, 21%
- May: 7.99%
- June: 3.45%
In the field, the price of milk collected in April this year and paid to producers in May rose 4.4% compared to the previous month. Compared to May of last year, the increase is 11.8%, .
Milk production in Paraná — Photo: RPC/Reproduction
THE appreciation of milk in the field, especially in the month of June, is due to the lower supply of the product, says researcher Natália.
And, despite expenses having retreated due to the recent devaluation of soybeans and corn, the producer’s disbursement with herd feeding remains at a high level.
“The reversal of the (upward) trend depends a lot on macroeconomic variables, such as inflation and the exchange rate”, explains Natalia. “Agricultural markets are globalized and a large part of the rise in the prices of productive inputs is explained both by the appreciation of these inputs in the foreign market and also by the devaluation of the real.”
The researcher understands that, on the supply side, the off-season should continue until mid-September, or when the spring rains return. “But, even if the supply can be restored, it is observed that the costs (of milk) can remain high”.
“Although the grain market signals cheaper prices with the beginning of the harvest, it is possible that global demand will drain domestic supply – and this can be intensified by the devalued exchange rate. That is why it is difficult to predict a reversal in food prices, like derivatives, given the same macroeconomic position that Brazil has adopted”, concludes the researcher.
In the last week, internet users from several states, such as São Paulo, Santa Catarina, Rio de Janeiro and Minas Gerais have been reporting the scare with the price of milk in the markets. See some posts.