Although the formal collection of milk in Colombia began to recover and the winter eased, allowing farmers to overcome margins and face a sharp increase in input costs, this does not seem to be enough for the sector to shine again.
And this is what is given by the accelerated pace of consumption during the pandemic; energy to carry out higher imports and greater use of inventories; A counterproductive situation arose because the cost of living began to experience, because of the demand for the contract.
The higher the price, the lower the consumption
Milk prices began to rise sharply from mid-2021, closing last year up to 37%.
Indeed, according to the report of Bancolombia; the largest increase in prices occurred in nearby stores in Medellín (31%)while in dairy products (cheese, butter and milk) the greatest growth was recorded in Barranquilla (34%)”, they pointed out.
This, according to analysts, has brought the “consumption of parties” to an end. “The greater demand for milk after the pandemic has caused the industry to increase the purchase of milk in 2022, both imported and national, and this has led to an improvement in voluntary goods and an increase in milk collection by 9%,” said Juan Pablo Espinosa. director of economic research.
However, he added that this scenario has changed since, for example, this year the consumption of Bancolombia cardholders (users of credit or debit cards) began to show a sharp slowdown.
And of course, the price of milk for the consumer is higher Industry sales began to take a toll, which was described as annual in October (2.8%).November (9.4%) and December (8.3%) of 2022, according to Dan.
Collection, is it finally?
The Colombian Association of Milk Processors (Asoleche) announced that the formal milk collection showed a recovery of 8.3% in November 2022; but in the middle of that year there was also a noticeable slowness because of a winter wave.
This is clear, e.g milk production in Tolima and the Atlantic Coast (30%), Valle de Ubaté and Chiquinquirá (15%), Nariño (15%), AntioquiaEje Cafetero and Valle del Cauca (10%), affecting prices and consequently the consumption of Colombian families.
In this sense, analysts said the collection, in itself says nothing. “The first thing that stands out is that Antioquia, the main national producer, grows barely 1%, possibly due to the financial problems of ranchers in 2021 and the excess rains due to La Niña. On the other hand, Boyacá grew by 17%, Nariño by 9% and the aggregate of the rest of the regions by 20%. Additionally, the behavior began to change from month to month: while from June to October the collection grew between 10% and 13% (annual variation), for November the increase was only 2.7%, which could reflect a lower appetite for purchases. through the energy process,” they explained.
This fact was also reported by dairy farmers in Antioquia when they warned about the teas a few days ago will drop, up to 50%production This is because of the winter and the affect on the quality of the pastures, the prices of inputs and the prices of land are rising.
Pressure for price?
In the past session of the National Dairy Council, the National Government announced a 26% increase in the liquidation price of raw milk paid to the producer.
For this reason, Asoleche expressed his astonishment when he considers that this decision does not address the situation of lower milk consumption in the region, therefore affecting nutrition and food safety, impacting productivity.
“The price to the producer in 2022 is compensated for the increased costs of livestock production. That is why the expectation of multiplying the increase of 26% is the cost that the entire dairy chain will have to assume, since what affects one link ends up impacting the entire sector”, said Andreas González, president of Asoleche.
And he added that in 2012 the the increase in the price to the producer by processing the dairy industry was 47.2%; while the production costs of the first sector increased by 17.2%. “We’re asking for data and calculations that support this disproportionate growth that doesn’t take the consumer into account,” he said.
In this regard, Fedegán explained that this regulation incorporated the quality of the composition of a liter of milk according to its content, according to the amount of P. for total solids, protein and fat.
“This does not mean that if the price of a liter of milk to be paid to the producer was $1,900 last February, it is now at $2,394. I don’t need it. The market is already paying such an increase due to the decrease in milk production, so the rise in prices depends on whether the production remains heavy or stable and that the import level does not increase so that the milk of local origin succeeds”, said Óscar Cubillos, head of policy and economic studies at Fedegán.
Thus, all indicated in 2023 the great challenge of the dairy sector will be the least impact on the cost of Colombians, to win again, their purchase decision.