The price of a liter of milk is dropping but it is still more expensive than gasoline

The price of a liter of milk is dropping but it is still more expensive than gasoline

The price of milk is falling, but consumers still pay more for one liter of food than for gasoline. Data from the National Petroleum Agency (ANP) shows that gasoline is sold, on average, for R$5.40 in the country and can actually be found for less than $5 in at least 13 states. For milk, there is no uniform national indicator. But in SP and RJ, whole milk can still be found for $8 a liter.

The good news is that milk prices should improve from September onwards for the consumer.

What is happening? According to Cepea (Centre for Advanced Studies in Applied Economics), the average price of a liter of milk for wholesale in São Paulo has decreased by about 17%. But it’s still on the shelves for R$7.59, as is the Piracanjuba Milk on At, Danone Milk, which was on sale at a 16% discount on Tuesday (23), sold for R$ 6.49. According to the ANP, the average price of gasoline in São Paulo is R$5.35.

In a Guanabara supermarket, a traditional carioca chain, Italac full-fat milk was sold at R$4.78 each in the promotion, while in Rio the average gasoline is R$5.44.

But why did the milk go up so much? Experts heard before UOL Explain that dairy production is a complex process and that prices are justified by a combination of factors such as prices for off-season food and feed, the cost of fertilizers, and the price of diesel.

Why is there an off-season for milk? Milk production in Brazil is affected annually by seasonality, that is, the drought that characterizes winter makes pasture production difficult – leading to the need for supplementation in animal feed, explains João Paulo Pacheco Rodriguez, an animal husbandry specialist and professor of dairy cattle breeding from the Institute of Animal Science in Brazil. UFRRJ (Federal Rural University of Rio de Janeiro).

This year, several regions of the country faced the worst drought in recent years. Less pasture, less fodder for cows and more need to supplement the herd’s feed.

Why does the price of food and feed affect the value of milk? Caleton Breasts, agronomist for the Rio Grande do Sul Agricultural Workers’ Union, also highlights the rising prices of feed made from corn, wheat and soybeans.

“It is an activity that depends on agricultural production, and in this period, corn was produced with very low quality. We had corn crops with losses of up to 100% in harvest due to lack of rain. That is, with low nutritional value, which affects the cost of fodder.”

Specialists also point out that Russia’s war against Ukraine, which are two main sources of agricultural inputs, is detrimental to the supply of products that affect the milk production chain.

Fertilizers also affect the value of milk: Fertilizers are used on farms that provide feed inputs. The agricultural engineer says that fertilizer prices have tripled, which also affected the milk production chain. Prestes claims that the production cost is between 40% and 50% higher.

What is the relationship between the price of diesel and milk? Diesel is the main fuel used in dairy farm management and in transportation from farms to industry. As the price goes up, the money spent on fuel ends up in milk and dairy products, says Joao Paulo Rodriguez.

Is there an expectation of comfort in your pocket? According to the animal husbandry specialist, the expectation is a decrease in the price of milk with the arrival of spring, as well as a decrease in the value of diesel, which was recently verified.

The trend is that the availability of pasture for animals will increase and the arrival of rains will increase the supply of milk in the market, thus lowering prices.

Dairy products are also imported from Mercosur. Entry of milk from Argentina and Uruguay does not pay taxes, this increases supply and reduces local prices.

Can the government prevent the milk boom? The professor at UFRRJ believes that it is necessary to focus on the general policies of dairy producers to avoid seasonal periods in production and reduce the withdrawal of producers in manufacturing.

According to the professor, the number of milk producers in Brazil is decreasing due to the difficulty of obtaining good levels of profitability in the face of high production costs.

He partly attributes the lack of adequate drought planning to the producers. With planning, it will be possible to ensure food for livestock throughout the year, avoiding a decrease in production during this period.

He says this can be mitigated through policies that encourage appropriate use of technologies in different regions of the country.

Prestes highlights reduced funds for programs to encourage family farming, a segment responsible for more than half of the country’s milk production. He cites the Prunav (National Program for the Promotion of Family Farming), which enables the financing of rural activities.

Why is milk suitable? In addition to being an important staple on the Brazilian table and forming the essential food basket, milk plays an important role in generating jobs and income in the country, which has more than one million producing properties.

However, the sector is on alert. The number of producers has been decreasing over the past 25 years, due to the low profit margin per liter of milk and the lack of technical assistance for small producers, which affected the production chain.

In Rio Grande do Sul, for example, which consumes 40% of the milk produced and sends the other 60% to other states, such as SP and RJ, the number of milk-producing families has fallen 52% since 2015, Prestes said.

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