understand the reason for the increase in the last few weeks

The price of milk has become one of the most talked about topics on the internet – and in supermarket aisles – in recent weeks. Although the value of the product naturally rises in the off season, which takes place between April and June, other points impacted the drink recently.

Santa Catarina is the Brazilian state with biggest monthly variation of the average net price. While the Brazilian average is 4.84%, the state registers an index of 8.89%.

According to the average raised by the Center for Advanced Studies in Applied Economics (Cepea), the price of milk collected rose 4.4% in May 2022, compared to the previous month.

Compared to May last year, the increase is 11.8%. Since January, milk in the field accumulates real appreciation of 14.5%. Cepea research also points out that this June the increase should be 5%, and that there is no forecast to stop rising. In some Brazilian regions, reports were of prices between R$7 and R$10.

I come here to inform you that the cheapest liter of milk in my neighborhood is 7 reais. Just that. A lot of people in the market looking and giving up on taking it. In fact, I was noticing the faces of people shopping. A mixture of bewilderment and general anguish. Is hard!

— Carolina Morand (@carolmorand) June 30, 2022

combined problems

The milk off-season is characterized by the dry climate, which impairs the availability and quality of pastures. Along with it, the effects of the La Niña phenomenon and the increase in production costs were largely responsible for the spike in prices.

The Center for Advanced Studies in Applied Economics (Cepea), which produces the Milk Bulletin monthly, explained that the combination of these factors was what caused the prices that scared consumers.

Cepea researcher Natália Grigol explains that, as La Ninã is in its second consecutive year, producers have not yet managed to recover from the 2021 drought. The phenomenon occurs when the waters of the Pacific Ocean cool down.
“In addition, the high production costs with various inputs for the activity have been putting pressure on ranchers’ margins since last year, complicating long-term investments – which has reduced the potential for supply recovery.
even in the face of the increase in prices paid to the producer”, emphasizes the researcher.

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