October 30, 2006

 

USDA: Brazil's fluid milk production to increase

 

 

Brazil's fluid milk production is forecast to increase by 2.5 percent in 2007 to over 25 billion litres, mostly due higher productivity of cows, says the US Department of Agriculture  said in its October 16 report on Brazil.

 

Production of other dairy products is expected to increase in Brazil at an average of 3 percent in response to stable domestic demand. However, exports of dairy products are expected to decline in 2007 for the second consecutive year due to the valuation of the Brazilian currency.

 

The USDA forecast the fluid milk production for the year 2007 (Jan-Dec) to increase to 25.4 billion litres, up 2.5 percent from the current year. 

 

The increase reflects higher productivity, mostly from milk producers associated with large Brazilian companies, and assumes good weather conditions in the major producing areas.

 

Higher productivity is the major factor contributing to increased milk production in Brazil. The increase is coming mostly from integrated producers supported by large multinational and Brazilian dairies, like Nestle, DPA, and Itambe. 

 

Another major production factor, according to the USDA is the increasing concentration of milk production in the industry. In 2004, the 15 largest dairy companies should account for nearly 65 percent of total fluid milk production under federal inspection, an increase of 5 percent from 2003.

     

Total consumption of fluid milk is forecast to increase by 2.5 percent next year.

 

An important aspect of domestic fluid milk consumption is competition from non-dairy products, such as soymilk, and other specialty lactose free products. As more companies enter this specialty market, prices decline and consumption increases.

 

For Jan-Aug 2007 the average price paid to producers in Brazil for fluid milk (type "C") is estimated R$0.48 per litre (US$ 0.22 per litre), down 4 percent from the same period last year, according to the report. The cost of production for the Jan-Aug 2007 is estimated at US$0.19.

 

Brazil imports insignificant volumes of fluid milk. Most of the imports consist of packaged UHT milk sold by companies from Argentina and Uruguay with commercial interests in Brazil. However, the country is expanding exports of condensed milk to a diversified market, including Venezuela, Philippines, Paraguay, and the US.

 

For the full USDA report, click here