News Milk
Argentina dairy sector is under considerable pressure
The financial position of dairy farmers in Argentina has deteriorated significantly in recent months, according to research by the United States Department of Agriculture (USDA). Dairy farmers often struggle with negative margins caused by rising feed costs and domestic price controls.
Dairy farmers in Argentina are currently stuck between two stools. They face higher costs while yields do not increase, as consumer prices are locked in by the government. Domestic price controls aim to limit food price inflation for consumers. But these have not been updated for quite some time.
Higher milk production
Relatively mild weather and flat prices have given farmers some incentive to ramp up milk production in an effort to generate some income. Milk production in the first months of this year already exceeded the level of the same period last year.
The USDA expects Argentine milk production of approximately 2021 million tons for 11.58. Compared to the production of 2020, this is an increase of 1,1%. Last year, the highest production volume since 2015 was reached in the first months.
Liquid milk consumption is also expected to increase by 50.000 tons to 1,8 million tons. This increase is then a result of increasing domestic consumption and the price controls that make milk more affordable for consumers.
Protests
The current situation has led to ongoing protests from local dairy organisations. They demand that current price controls be updated or abolished. Price controls have recently been extended until mid-June, but several dairy products have been removed from the list.
According to market reports, leading dairy processors are currently in talks with the government about establishing a minimum production level for various dairy products. In this way, the government wants to guarantee sufficient availability for domestic sales to help control food price inflation.
Export
Now that domestic consumer prices are often fixed, exports remain all the more important for the financial health of the dairy industry. According to a survey by OCLA, a dairy organization, 25,3% of Argentina's dairy production went to export channels. The top five destinations for Argentine dairy products are Brazil, Algeria, Russia, Chile and China.
Chanti Oussoren
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