Dairy invoicing fell 6% in pesos during 2022

The tamberos business continues to experience enormous difficulties

The dairy business shows signs of deterioration. The prices for the milk that the producer receives from the dairy industry rise well below inflation. And for this reason, the invoicing of the dairy farms fell by 6.1% year-on-year in pesos during 2022, while in dollars it presented an increase of almost 17%, due to the effect of the exchange rate.

The farm price rose 20%: when will it reach the consumer and how much will it add to the inflation rate

The increases were registered between last Friday and yesterday. To find out if they will turn to the counter, specialists say that we will have to wait a few days. And if there is a transfer, it would represent an impact of less than 2% on the CPI

A trend that has been accentuated for more than a year and a half, and that during 2022 had its impact on the balance sheets of dairy establishments that closed the year with an average price of 66 pesos per liter sold to dairy factories, when at fewer needed values ​​of 100 pesos to close their production costs. This was reported to this outlet by Jorge Giraudo, director of the Observatory of the Argentine Dairy Chain (OCLA), who also recalled that producers faced an increase in costs in recent months as a result of the soybean dollar, and in addition to the drought that resulted in a lower availability of reserves.

“In the accumulated during 2022 there was a turnover of less than 6.1% year-on-year measured in pesos and in dollars, a rise of 16.9% was verified. The drop in billing in pesos is fundamentally because the price has been adjusting, especially in recent months, significantly but always below inflation. In other words, revenues fell in constant currency, while production remained stable during the year, although falling in the last months of 2022,” said the specialist.

Drought impacts dairy

In relation to the increase in billing in dollars, the director of OCLA explained that “obviously the highest billing recorded in dollars during 2022 is the product of measuring it with the wholesale exchange rate of the Central Bank, which as we know has a strong delay and it does not reflect the advance of inflation but rather that it is far behind, and that is why a higher price per liter of milk is perceived to a certain extent in dollars, when in reality that is not happening”.

Currently the problem is increasing as a result of the drought, which impacted the pastures and forced them to supplement more and also buy grains for the consumption of dairy herds. In April 2022, a ton of corn was paid at a rate of 18,000 pesos and today it exceeds 47,000. The greatest impact is given by the increase in prices that they had to overcome for dollarized inputs.

Drought: Senator Alfredo De Angeli presented a project to gradually eliminate retentions

The initiative proposes a direct elimination of withholdings to regional economies, and a gradual decrease until the elimination of those products with the greatest fiscal impact, such as soybeans, corn and wheat.

The entire dairy chain has been demanding the elimination of dairy export duties, to give the exporting industry greater purchasing power in the domestic market. However, government attention is focused on sustaining the current export duty scheme, which is 9% on powdered milk and 4.5% on cheese. To address the sectoral problems, Minister Sergio Massa announced the “Impulso Tambero” program, which promotes compensation for almost 65% of the dairy farms.

Lastly, the domestic market is also reporting negative signals. Dairy prices on shelves in Greater Buenos Aires increased by 110% in 2022, while in the last five years, more than 15,000 tons per month stopped being consumed. However, the values ​​of raw milk at the gate barely exceeded 90% adjustment in the last year.

The latest rains were the strongest since March 2022 but did not change the drought scenario

A report from the Rosario Stock Exchange indicated that only 15% of the Pampas region received more than 45 mm. What can happen in the short and medium term

Keep reading:

Massa relaunches Fair Prices this week, in a new attempt to lower inflation: it will be in force until June and will cover almost all items The Economy accounts for 2023: lower spending and more measures to comply with the IMF Due to the fiscal goal with the IMF, public investment fell and the Government seeks to keep it stable this yearThe impact of the drought: 5 keys to understanding how and how much it will hit the Argentine economy

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