Milk And Byproducts Exprots: Is It A Solution For Producers Or A Problem For Consumers

The Brazilian milk production has been increasing at great rates year-by-year since the nineties. Between 1996 and 2004, the growth was about 2.96 percent by year, from 19 to 23.3 billion litters. Given that, market participants fear that the production keeps growing at those rates while no politics to motivate the domestic demand or the exports are created. That could result on an oversupply of milk in Brazil in the short term. In this context, prices could move down and a series of problems would reach the domestic market. Different from exports, milk imports by Brazil have been presenting a downward trend, as showed on Figure 1. It is important to consider that, last year, imports impacted in a negative way on this sector, especially after the Real Plan, when in 1996 Brazil imported 12 percent of the total milk production. That pressed down prices and forced a lot of milk producers to leave the activity. During the last nine years, milk imports reduced from 2.2 billion of litters in 1996 to 326 million of litters in 2004 (Foreign Trade Secretary - SECEX). This decline was a result of exchange rate devaluation in 1999 and of antidumping measures, as well. These actions were taken in the same year to protect Brazilian milk producers against the unfair competition with the product of Argentina and European Union, which were traded at subsidized prices. However, who will be benefited or prejudiced in the Brazilian milk market with the increasing exports?