PANDEMIC EFFECTS ON THE DAIRY SECTOR

MAY LEAD TO PRICE DROPS IN THE

OFF-SEASONMAY 2020

Natália Grigol

Researcher:

Journalist in charge: Alessandra da Paz (Mtb: 49.148)

Photos:

TEAM

Alessandra da Paz (Mtb: 49.148)

Bruna Sampaio (Mtb: 79.466)

Flávia Gutierrez (Mtb: 53.681)

Nádia Zanirato (Mtb: 81.086)

Proofreading:

Bruna Sampaio (Mtb: 79.466)Design:

Pixabay.com

Bento Viana/Senar

Flávia Gutierrez (Mtb: 53.681)

Nádia Zanirato (Mtb: 81.086)

Translation:

Piracicaba, May 8, 2020.

AGRIBUSIN

ESS AND CO

RON

AVIRUSAGRIBUSINESS AND CORONAVIRUS

3

CEPEA - CENTER FOR ADVANCED STUDIES ON APPLIED ECONOMICS

The impacts of coronavirus on the con-sumption of dairy products are evaluated by Cepea researchers in this sixth spe-

cial edition about covid-19 and agribusiness. According to data from Cepea, after a steady demand in March – and, consequently, price rises in that month, when coronavirus star-ted to spread across Brazil –, trades of dairy pro-ducts weakened in the domestic market in April. Food services (important distribu-tion channels for dairy products) have been affected by the pandemic, and, in addition, consumers reduced purchases frequency, and many families had their income lowered. This scenario has reduced consumption of seve-ral dairy products in April, mainly the chilled ones (perishable), which have higher added--value for the industry. In a few weeks, many companies may face low revenue, which will certainly be transferred to producers in May.

The consumption of cheese was the most affected. Players surveyed by Cepea indica-ted many difficulties to assure liquidity in April, discouraging the production. As a consequence, the raw milk supply increased in the spot market (trades in the industry) in April, which may press down the value paid to producers in May. The revenue decrease for dairy farmers in May is atypical because of the off-season period and would occur in a period of rising production costs, leading to a supply decrease. Facing sudden revenue oscillations, producers who have less efficient systems may increase the slaughter of cows and leave the activity. Thus, it is a delicate moment, since de-cisions need to be made in the short-term, whi-ch may bring negative consequences to supply in the long-term – and this is even more delicate for such a complex activity as milk production.

This report is a brief version of the complete text, available here in Portuguese.