T
hebalanceofthevaluespaidand
received from the dairy activity
was favorable in early 2017, but
inmid-yearthepricesofmilkhad
fallen, giving rise to concerns.
While cost reductions on the farms dropped
1.9 percent in the first half of the year, stem-
ming from the bigger offer of corn, an item
that weighs heavily, the Center for Applied
Studies on Advanced Economics (Cepea), of
theLuizdeQueirozCollegeofAgriculture(Es-
alq), a division of the São Paulo University
(USP), observed results in June that suggest-
ed the beginning of a transition period to-
wards smaller values fetched by the product.
Checks
andbalances
The situation in the first
half of 2017 identified
a better relationship
between prices and costs,
but at the beginning of
the second half of the year
concerns began to unfold
This confirmed immediately in the sequence,
withareductionof2.7percentinJuly.
Ina comparisonwith the statistical num-
bers released by the Cepea, referring to the
average of seven Brazilian states, and the
numbers furnishedby theAgricultural Econ-
omy Institute (IEA), based in São Paulo, the
Interlactus PlatformTeam, a division of Em-
brapa Dairy Cattle, ascertained, at the end
of the first half of the year, that “farm gate
prices reach the average value of 2016, and
12 percent above their real historical price
over the past 10 years”. On the other hand,
it registered thecost of concentrate, inJune
2017, at R$ 0.63/kg, “around 40 percent be-
low the price of the same period in 2016”,
and an expectation “to come to year’s end
with an average of R$ 0.70/kg, equivalent to
12 percent belowhistorical averages”.
Embrapa researchers relate this long pe-
riod information to a bigger global param-
eter. Within this context, they observe that
the Brazilian production costs from 2006 to
2015 remained between US$ 0.30 and 0.40
per kilogram of milk, “within the global av-
erage”. The domestic prices are supposed
to have outstripped the global prices, tak-
ing into consideration the average value at
farm gate level of US$ 0.43/kg, equivalent
to R$ 1.19/liter (real values), considering the
period from 2007 to 2016. “This level is 12
percent higher compared to the global ref-
erencepriceestimatedby IFCN (Internation-
al Network for Comparing Milk Production
Systems) at US$ 0.38/kg or R$ 1.07/liter”.
Upon referring towhat thenumbers sig-
naled at the end of the first half of 2017, the
team members were spotting more prom-
ising conditions towards production recov-
ery”, and the National Food Supply Agen-
cy (Conab) was looking towards the same
direction, both suggesting the chances for
a reaction triggered by consumption. In
the meantime, the Cepea, upon ascertain-
ing a decrease in prices in July, concluded
that “it was chained to the still weak de-
mand for dairy products, due to the declin-
ing purchasing power of the consumers”,
as well as the increase in milk production
that was going on. In South Brazil, which
is further affected by imports of the prod-
uct, the matter was viewed as critical and
was a cause for concern in the entire sec-
tor, which was calling on the government
to acquire the product, so as to exhaust the
market and balance prices.
Inor Ag. Assmann
43
