One Billion Liters: Brazil Becoming a Global Milk Power

    Brazil's milk cow grazing

    Brazil's milk cow grazing Brazil is going to have record-high exports of dairy products in 2008. According to the evaluation of the analyst at the National Food Supply Company (Conab), Maria Helena Fagundes, based on projections made by sector organizations, the equivalent to 1 billion liters of milk should be shipped, generating revenues of up to US$ 750 million.

    In the first half, foreign sales totaled US$ 226.8 million, whereas last year's exports totaled US$ 263 million. "The trend for the second half is for sales to grow even further. This is a widespread phenomenon in foreign trade, demand rises as a result of year-end parties and cold weather in the Northern Hemisphere," said Fagundes.

    The figures include items such as whole milk powder, condensed milk, dairy cream, evaporated milk, butter and cheese, among others. Milk powder and condensed milk, according to the analyst, answer to 75% of exports. Imports of products in the sector, according to her, should total approximately US$ 200 million this year, resulting in a US$ 550 million surplus for Brazil.

    The country's share of the sector's global trade is still small, lower than 2%, according to Maria Helena. However, it must be remembered that for a long time, the Brazilian balance of trade for dairy products showed a deficit. As the national economy opened up, in the early 1990s, large multinational companies began operating in the local market and, up until 2002, there were no regulations preventing entry of imported products subsidized by their countries of origin.

    "Dairies are the most subsidized products in the world. In the countries of the organization for Economic Co-operation and Development (OECD), the sector absorbs a significant share of the US$ 1 billion spent on subsidies," stated Maria Helena.

    It was not until after Brazil adopted antidumping measures and set a price commitment with its Mercosur partners that the domestic industry started to react.

    The balance of trade started running a surplus in 2003, with the exception of 2006, when a deficit was shown once again, as a result of low prices paid to producers, which prevented production from expanding more strongly.

    Presently, according to the analyst, the international scenario is favorable to Brazil, as leading global suppliers, such as Australia and New Zealand, have little production surplus available for exports, partly due to drought. The European Union (EU), another heavyweight producer, has been gearing its products toward the domestic market, especially new member countries from Eastern Europe, which are undergoing rapid economic growth.

    Furthermore, says Maria Helena, rising prices of inputs, especially raw materials for animal feed manufacturing, drive up production costs in European countries. In Brazil, a large share of the herd is raised on pasture, even though there is price pressure as well, due to the rising costs of fertilizers for grazing land, mineral salts for complementing the cattle feed and fuels for transporting the products.

    She added that countries such as New Zealand and Australia are investing more in exports of finished goods and less in those of basic goods, thus enabling Brazil and other "emerging" supplier nations, such as Argentina and Uruguay, to maintain their spaces in the international market. "I do not believe this to be merely an occasional trend," asserted Maria Helena.

    Currently, Brazil produces some 30 billion liters of milk per year, and exports answer to just 3% of that total. To the analyst, Brazil is capable of meeting the rising demand, but the way in which the market will behave in the long run will depend on variables such as production volume in other exporting nations, the cost of inputs and prices paid to producers.

    She claims, however, that it is unlikely that the sector's balance of trade is going to decrease from its current level. "I believe that this situation has come to stay, same as with other agricultural products," she declared. "Brazil is on its way to becoming a leading dairy exporter country," she stated.

    Brazil exports milk and dairy products to more than 100 different nations, the leading destinations being in Latin America, Africa and the Middle East. The Arabs constitute an important market. "Ever since exports started gaining strength, the Arabs have demanded Brazilian products and sustained their status as important clients," said Fagundes.

    Countries in the region imported the equivalent to US$ 48.5 million in dairy products from Brazil in the first half, according to data supplied by the Brazilian Ministry of Development, Industry and Foreign Trade.

    In the case of milk powder, for instance, Sudan, Algeria, Mauritania and Saudi Arabia rank, respectively, in the 3rd, 5th, 6th and 8th positions in the ranking of leading buyers from Brazil.

    Tunisia is the 4th largest market for diary cream. Egypt, Yemen and Kuwait are, in that order, the three major butter importer countries, and Saudi Arabia is the 2nd leading buyer of mozzarella cheese.

    Anba – www.anba.com.br

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    • Show Comments (20)

    • jerrydill

      Good milK?
      I agree with boo that the milk in Brazil is terrible. If they want to start making more money they need to focus on better dairy practices.

    • João da Silva

      Jon
      [quote]To make amends, come to Whistler B.C. this winter for some skiing, alot of your countryman and neighbours are here[/quote]

      You want C.c to break his legs skiing, eh?

      [quote]I could buy you a good CDN latte[/quote]

      Try Molsons instead 😀

    • jon

      Ch C,

      To make amends, come to Whistler B.C. this winter for some skiing, alot of your countryman and neighbours are here..I could buy you a good CDN latte 😉 😉

    • ch.c.

      Ooops the sign PLUS doesnt print.
      Therefore the formula is :_
      Financial Cost (TJLP)… PLUS…. BNDES Fee……PLUS…. Financial Intermediation Rate….PLUS….. Accredited Financial Institution Fee !!!!

      Ohhh and also…PLUS some initial fees to establish the possibility of a loan …of course !

      The only thing that are endless are the Brazilians fees !!!!

      😀 😉 😀 😉

    • ch.c.

      Joao !
      Neither You nor Bo is a junkie.
      But Jon is definitely one. Just refer to my many previous comments concerning Jon.

      And concerning the Brazilian subsidized rates, let me have a big smile.
      You, as a Brazilian, dont even seems to know how it works. Funny but so it is.
      Far more tricky than what you think. Let me explain briefly :

      The BNDES DOES NOT effectively lends money at the TJLP rate. Laughable…but true.
      the formula is ;
      Financial Cost (TJLP) BNDES Fee Financial Intermediation Rate Accredited Financial Institution Fee.
      Smilesssssssssss
      You can see that the ones making a ton of money are all the intermediaries, with well paid jobs of course.
      On top of that the above formula and various intermediaries gross margins…change, depending of the program to subsidize.
      Because believe it or not, nearly everything can be government subsidized, not only agriculture.
      For more details just refer to the BNDES site :
      http://www.bndes.gov.br/english/bndesaut.asp
      You will see that one can even get subsidized in…US$ and not only in BRL

      You can now realize that the TJLP rate is not what the borrowers end up paying…but just…THE BASE !!!!

      Even DEERE tractors /harvesters/sprayers can be subsidized but only as long as they are produced in a Brazilian plant.

      Agreed, these rates, not so low when ALL intermediaries margins are included, are VERY high….but still a fraction of what it would cost if the loanq would have been made by a bank provided that bank would have accepted the financing….which is another story.

      For our BBC farm, we were offered some subsidized loans, not even requesting them.
      Guess what : in view of all the added costs and endless paperworks, reports, justifications needed, with more than one goverfnment agencies, typical of the Brazilian bureaucraty stayle, we said : NO THANK YOU VERY MUCH, WE CAN GET LOANS AT 4 % in Swiss Francs, NON SUBSIDIZED…IF NEEDED…BUT WE DONT DONT NEED ANY LOANS…..SINCE WE FINANCE THE FARM DEVELOPMENT BY HAVING INVESTED OUR CAPITAL IN BRAZILIAN GOVERNMENT BONDS USING…..the rates YOU are paying foreigners,,,,, TAX FREE….!!!!!
      They realized how goofing you policies are.
      Simple autogoals…..for which Brazil excels !

      😀 😉 😀 😉 😀 😉

    • João da Silva

      Ch.c
      [quote]To all junkies !!!!![/quote]

      Now, let me get it straight. Are you calling Jon, Bo, Ric, Jerrydill (who by the way referred to “Bo” as “Boo”) and ME as “Junkies”, just because we were discussing about Milk? I take umbrage.

      You don’t have to buy shares in NestlÀƒ© . You can always make amends for using insulting terms to refer to us, by donating hundreds of Swiss Cows to BoÀ‚´s Condo in Aracaju. Then we lay a pipe line from North to South to distribute fresh milk right out of the udders of the “Swiss Cows”.

      This is a good project, as long as the government lends us money at “SUBSIDIZED” interest rates much below the current SELIC rate). 😀

    • ch.c.

      Furthermore to the junkies & Co…..
      ….the OECD is not subsidizing….COFFEE !
      therefore under what common sense is Brazil heavily subsidizing this industry ???????

      To make it cheaper to the OECD consumers ??????
      Thank you !
      The world consumers, in developed or emerging countries should then thank the OECD, for subsidzing grains, which make end up in a lower price…..not higher….to my knowledge !!!!

      If you like high prices, feel free to sell goods as high as you wish to YOUR consumers !
      We could even charge you more for what YOU cant produce by yourselves sucg as cars, trucks, meds, etc etc !

      No doubt your entrepreneurs are VERY happy to have seen their energy prices skyrocket, your farmers very happy to have had
      their fertilizers, pesticides, fongicides, tractors, harvesters and transportation costs zoomed up !!!!!

      It all makes common sense….using your own analysis and arguments !!!! More expensive is better than cheaper !!!!

      At this game, Brazil will lose – GUARANTEED – jUST AS YOU LOST IN THE PREVIOUS ECONOMIC CYCLES !!!

      THE FUNNY THING IS THAT BRAZIL INFLATION RATE, DESPITE HIGH PRICES SHOULD BE BENEFICIAL FOR YOU, IS MORE THAN DOUBLE THE INFLATION OF THE DEVELOPED NATIONS !!!!!
      Very good…for your long term financial health !!!!! Isnt it ?

    • ch.c.

      To all junkies !!!!!
      The picture cannot be a Canadian “original” cow…because they dont have any from origins dating back to hundreds of years.
      Same for …Brazil…by definition !!!!

      And if you would care to look at the origin of this type of cow in YOUR countries, you will realize most have a Swiss origin !!!!

      Again something you had to copy….unable to have your own milk cows !!!!

      This said if you work hard hard and harder, I will then buy shares in NestlÀƒ© !!!!
      Lets face it, they are the ones producing more than anyone….whole milk powder, condensed milk, and evaporated milk.

      It is exactly the same for grains : those producing them are not those making the most profits.
      For grains it is the INPUT suppliers such as Monsanto, Syngenta, Deere, and those producing fertilizers, pesticides and fongicides.
      And for the byproducts of milk it is the one with the world best technology, QUALITY, Marketing and distribution channels : NESTLE !!!!
      Ohhhh and Swiss companies also excel in animals vaccines, meds and various illnesses and preventions !!!!

      You should produce 100 billion liters of milk…….that would be great for Switzerland and various Swiss Companies…..no doubt !!!!

      😀 😉 😀 😉 😀 😉 😀 😉 😀 😉

    • Ric

      Yes.

    • João da Silva

      Ric
      [quote]In the US, milk zapped by radiation and packaged in “bricks” is not legal.[/quote]

      Ric, are you referring to the milk that is packed in the cardboard cartons (leite Longa Vida) and sold in the supermarkets here?

    • Ric

      Milk
      Here I am doing that for which I have often criticized others:comparing stats with the USA.

      But for comparison purposes, the US 2006 milk production was 182 billion pounds which is approx. 80 billion liters.

      In the US, milk zapped by radiation and packaged in “bricks” is not legal. Most grade A is fresh.

      In the Amazon, milk is collected in five gallon milk cans carried by canoe to destination. The cans are rinsed in river water. No one uses this milk without boiling it. One hopes.

      In the NE interior, most milk is collected in the cans and transported in two wheeled carts pulled by horses or burros.

      There are no 10 gallon holsteins nor modern processing plants where the whole process from cow to homogenized, pasturized milk being loaded into trucks is done under the same roof and quickly.

    • João da Silva

      Jon
      I went through the link you sent and I liked the last 2 paragraphs:

      [quote]But not all the newcomers to Brazil’s millionaire’s club are big spenders. Mr. Calderaro, the cadet-turned-investor, still lives in a rented apartment and prefers investing his money in the stock market rather than on flashy cars and beach houses.

      À¢€œMy mother likes to say I’m economical, not a cheapskate,À¢€Â he said. À¢€œI think I get more pleasure out of making money in the market than I do spending it.À¢€Â[/quote]

      I hope Calderaro remains that way , but invests some money in the Real estate properties-for his own good. I am not kidding!

    • bo

      Sorry guys…
      but the milk here in Brazil sucks.

    • João da Silva

      Jon
      [quote]Which thread Joao? [/quote}

      [url]https://www.brazzil.com/articles/194-july-2008/10087-a-booming-brazil-just-another-myth-created-by-the-press.html[/url]

      Thanks for the link to the Globe and Mail. Shall read it tomorrow. Right now I am going to watch an interesting an interview on one of our TV networks about the “security” of the Amazon.

      Please tell your fellow CDNs that “Amazon is ours” and NOT to the CDNs! 😀

    • jon

      Which thread Joao?
      I was on today and read some of your and Ch C’s comments. The debate about Brazil’s “economic miracle” is interesting. A CDN paper today had a story on new millionaires in Brazil and as the author of that article in brazzil.com said Brazil seems to be in the headlines today.
      http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20080725.wbrazil0726/business/Business/businessBN/ctv-business

    • João da Silva

      Jon
      Every single blogger in this site (especially you and me) knows that Ch.c has devious mind 😀

      btw, did you go through https://www.brazzil.com? His comments were interesting (so were mine!)

    • Jon

      Joao,

      Who do you think took the picture?? Ch C is gathering evidence to sue Nestle 😉

    • João da Silva

      Jon
      [quote]We have stripped our vegetation for oil sands so it must be grazing in one of the Swiss canton[/quote]

      Do you mean to say that the cow is destroying Ch.c`s front and Back lawn?

    • Jon

      Joao,

      We have stripped our vegetation for oil sands so it must be grazing in one of the Swiss cantons 😉 😉

    • João da Silva

      Jon
      The good Cow in the pic: Is it Swiss or CDN?

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