The losses generated by the floods in Rio Grande do Sul are expected to cause a increase in prices of raw milk and dairy products in the countryside from this monthaccording to a report released on Tuesday (7) by the Center for Advanced Studies in Applied Economics at the University of São Paulo (Cepea-Esalq/USP).
Rio Grande do Sul is the third largest milk producer in Brazil, after Minas Gerais and Paraná.
The rise in prices must be caused by a reduction in supply as a result of various losses that farms and industries are experiencing.
Lots of lost animals and had their destroyed structures by floods. Furthermore, road closures are making it difficult to milk transport to other locations, and the arrival of inputs – mainly feed – even some rural properties.
“[Há] reports of rationing and lower production due to poor herd nutrition. There are also reports of more critical situations that result in milk being discarded in the field, due to a lack of feed, electricity and fuel”, says the report.
There are also properties without water and electricity. The lack of energy prevents the automation of milking and the cooling of milk on farms. While in industry, it impacts dairy processing and conservation.
“To the Structural losses in the countryside and industries could delay the recovery of the supply of raw milk and dairy products. As a result, the prospect of rising producer prices strengthens for this and the coming months”, says Cepea.
“In parallel, it is believed that, even with many families homeless, institutional purchases of dairy products can sustain demand. In any case, the increase in logistical costs must be passed on to dairy prices”, he adds.
Cepea reinforces that, so far, it is not known how intense the price rise will be, considering that they are calculating the losses.
Rains in RS cause destruction in the countryside
Tags: Milk prices rise countryside floods Cepea Agribusiness
