Outlook for Brazilian milk producers turns sour

President Luiz Inácio Lula da Silva signed a decree in October eliminating tax breaks for milk importers, the latest step in an effort to help Brazilian farmers struggling with low prices and competition from members of Mercosur, the trade alliance between Brazil, Argentina, Uruguay, and Paraguay.

After skyrocketing in 2022 — with dairy inflation reaching 46 percent in July last year — milk prices have now taken a nosedive. The Brazilian Institute of Geography and Statistics has recorded deflation in milk and dairy products for the past three months. In the 12 months to September, prices fell by more than 5 percent.

Brazil’s dairy sector has been lobbying for months for restrictions on subsidized imports, particularly of powdered milk. At an industry event this week, the National Confederation of Agriculture (one of the most powerful agricultural lobby groups) argued that a boom in imports has disrupted domestic production chains.

“We have witnessed 13 months of aggressive, predatory, and unfair milk imports,” vented Jônadan Ma, vice president of the confederation’s dairy chamber. “Imports reach about 200 million liters per month, or about 10 percent of what is consumed in Brazil,” he added.

Mr. Ma argues that the sector’s loss of revenue has reached 30 percent.  

Brazilian trade data...