The dairy sector would contribute 32 million liters per month in products from Priced Care

The situation for dairy is complicated, not only in the world, but also in Argentina with the usual condiments offered by our politics and reality.

This week began with surprises, when despite forecasts that gave continuity to optimism, the international prices set by the electronic auction of the largest dairy cooperative in the world, Fonterra, under the name Global Dairy Trade, contracted unexpectedly.

Although the index stands at 1,579 points and matches the rate of August 2013, with milk powder falling 2.1 per cent to $4,596 per ton, the international market remains tempting, but it must overcome the ups and downs posed by the war, following the pandemic, and even from this part of the world logistics is still very complex due to the lack of containers.

Climatic conditions and rising costs mean that global raw material production continues to decline, with a record of -1.8% among the main producers, meaning just over 14 million litres less produced daily.

But demand continues to rise, as a positive consequence of the pandemic, although in these weeks the war between Russia and Ukraine hits the commodities squarely and fuel rises so much that conditions become even more complex. This happens in Spain, where the transport strike that has been active since Thursday created a brake on dairy production, which already has shortages in ice cream shops in areas of Lugo and Galicia and in regions such as Valencia a restriction of units per purchase applies.

However, this could be a great opportunity for the Argentine dairy sector. Although costs rise, our producers struggle to continue to sustain the supply of raw milk and industries do not stop supplying the entire country as they should. Of course, these international prices and the need posed by consumption are a great opportunity, but domestic conditions are not given to take advantage of this advantage.

Far from that, for more than a month there have been growing rumors and fears linked to the intention of the National Government to increase withholding in the dairy spectrum and even to close exports or generate quotas for outgoing abroad, after what was a record year, due to the talent of private individuals to negotiate and overcome the obstacles already mentioned.

They are hallway comments in industries of all sizes, but also in producer entities that came out weeks ago to explain in a message to the community that “Intervening the milk market hurts us all”, adding a brief explanation with less active labor and more unemployment in cities, the closure of tambos chicos, but also of less milk and more inflation, in a trend that does not stop.

Producers currently receive an average price of 37.69 pesos per liter, which is equivalent to about 34 cents on the dollar, a value that falls short of costs and above all against corn and its equivalence in milk. The policies that would like to be repeated do not help, but the opposite, that is why the immediate lack of definition is so much that an attempt is made to encourage the anodyne audacity of the Executive with a formula of the business chambers.

Private maneuver

Already by mid-2020, it had been proposed to have the equivalent in products of a few million litres of milk at reduced prices, in order to be able to get out of the ceiling value schemes for the entire chain. This was only considered to be launched last June, although the primary elections mismatched the fundamental agreements, although that was how the maximum prices began to be left, but the losses to the dairy industries were not curbed.

However, since mid-2021, companies contribute 20 million liters monthly to the Pricos Cuidados program. A few days after the update of the values of the same scheme and with the sidereal inflation figure on the table, the first of two meetings was held on Tuesday to define changes in this agreement.

As if it were a sign of goodwill, the offer made by the Dairy Industry Center, the Association of Small and Medium Dairy Enterprises, together with the Intercooperative Board of Milk Producers was to increase the supply of products for the Prices program that are most abundant in the Federal Capital and the Conurbano and is diluted to measure that one spreads on the national map, despite touring national supermarket chains.

The proposal

As Infobae learned, the dairy industries are proposing to add 10 to 12 million liters more to the monthly supply that includes fluid milk, caramel, soft cheese, or those with the greatest demand. This was done, for the first time, with the leaders of the business chambers in front of the Secretary of Internal Trade himself, Roberto Feletti, and even representatives of Agriculture.

Last Friday there was another, more technical meeting, where it was supposed that the numbers could be closed and everything that enters the updated list that will be activated on April 7 in stores could be defined. The Government recognizes that the structure of this increase of more than 50% in supply must have a balance between production and industry, with respect to trade, because the first two links are the ones most affected by the direct increase in costs.

What is more difficult for the Executive to digest is that the prices of products in the shelves and refrigerators are a consequence, not a cause of inflation. It is well known that any restrictions that may arise in the immediate or medium term can generate what the productive and industrial sectors agree to define as a “disaster”. The option is never to overflow the domestic market, but to improve domestic and external trading conditions so that the sector can grow, which is what it has been looking for for more than two decades.

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