The crisis dairy 2015/2016 has been the greatest impact on the records of the activity. Unlike the crisis of 2001, when we came out of the Convertibility and the dollar gained to be worth 1 weight 4 weights, this will have been combined with many other negative factors to generate what can be called a “perfect storm”. The external market is depressed, the devaluation of the currency, the tariff adjustment, the elimination of deductions for maize and wheat in addition to the reduction in soybean, and the increase of the fuel stand out as the factors that have the greatest impact in the dairy business. These economic factors were exacerbated by the recurrent flooding in the two major drainage basins of the country (Santa Fé and Córdoba provide nearly 70% of the national total), producing the largest drop in the national production year-on-year in the records of 50 years (from 14.2% in 2016 over 2015).
In the graph below is shown the evolution of the relative prices of greater impact in the production of milk (taking January/2014=1). There it was observed during 2014, the year prior to the desmonoramiento, the price of milk to the producer accompanied well with the rest of the variables. As of may 2015 begins to fall, the price of milk in the gate of tambo and the producer starts to lose against the inputs crunching the most of the business with the shot from the Us dollar January 2016 (60% of the inputs dairy farmers are tied to the u.s. currency); and the strong relative increase of the Balanced Food (by the removed from withholding corn, affecting account of Power that takes over half of the costs); the Diesel (impacts in a variety of ways, and we estimate an impact of more than 15% in costs); and Soy that represents the cost of Rent (more than 40% of the milk is produced on land leased).
Today the recovery of the price managed to catch up with the evolution of the Oil and the Soy staying away yet the Dollar and the Balanced Food. There is much discussion about costs, but this is the reality of the trench and continues to expose the primary production of milk to continue producing without margin and dragging a liability generated by more than 20 months of job loss.
Marcos Snyder