Nariño dairy farmers’ gloomy situation, aside from the good news from Alqueria

After the company Alqueria announced that it would suspend its operation in the department of Nariño as of June 22, the Minister of Agriculture, Jhenifer Mojica, announced that she reached an agreement with the company to “continue with the operation in the department until the placement” of dairy products is achieved.

As for him, Carlos Enrique Cavelier, president of the Alquería Foundation, said that “we will not let go of the department until each of the farming families have their milk placed in the PAE, in other plants or for other uses”.

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Among the measures agreed upon and announced by the Ministry of Agriculture, the one that stands out is the purchase of liquid milk through a business roundtable in which national and local authorities will participate, as well as operators of the School Feeding Program (PAE, for its acronym in Spanish). It will be an anticipated scenario of public purchases, according to the Ministry.

The news, welcomed by the Nariño’s dairy farmers, came after three associations related to the dairy industry, Analac, Dignidad Ganadera Colombiana, and Asoleche, raised the alarm about the situation of dairy farmers in Nariño and the country in general.

However, for these three associations, the sector’s issues, and specifically those of Nariño’s dairy farmers, go beyond the decision taken by Alqueria.

Milk production stockpiled by the industry has been dropping

On June 13, Analac published a press release on its Twitter account, in which it expressed its concern about “a challenging 2023” and the “critical situation in the south of the country”, and expressed its willingness to work with national and local authorities to establish “support for producers, the purchase of raw milk and the commercialization of dairy products”.

The association explained that, between January and April of this year, the production of milk collected by the industry fell by 6% compared to the same period in 2022. This decline has serious implications for the national economy, since, according to Asoleche, more than 800,000 families in Colombia produce, process, and/or market milk and dairy products. The dairy chain also contributes 3.5% of Colombia’s industrial GDP.

The drop in the industry’s milk production is due in part, as the association indicated, to the weather (after a harsh La Niña phenomenon and a few months of climate neutrality, the El Niño phenomenon is approaching), high production costs, marketing conditions, and inflation.

Of the dairy departments, Nariño and Cauca, whose producers supply the local market and send part of their production to several cities in the country, have been the most affected.

This is due to the fact that, in addition to the aforementioned problems, dairy farmers in Nariño and Cauca have had to face the collapse of the Pan-American Highway, whose solutions are still partial.

Costs rise and prices paid to producers fall: Nariño dairy farmers highly impacted

Analac noted that, along with “historically high milk production costs”, which in the first five months of 2023 were 9.8% higher than the same period last year, a downward trend has been seen since March in the prices paid to producers.

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According to the association, the drop in prices paid to producers continues to this day, with the exception of those who are affiliated with cooperatives. Again, the situation of dairy farmers in Nariño is particularly serious. In that department, producers are receiving a price “18.2% below that of other dairy basins in the high and medium tropics”.

Dairy consumption has dropped

On June 13, Asoleche also published a statement on its Twitter account, in which it includes the reduction in per capita consumption of dairy products among the factors that explain the difficult situation faced by the Colombian dairy chain.

According to the association, lower consumption is “a consequence of inflation, unemployment, and international circumstances”.

Although the FAO recommends that per capita consumption should be at least 170 liters per year, Colombians drank an average of 154 liters in 2022, after reaching 162 liters in 2021.

Concern over imports

Analac and Dignidad Ganadera Colombiana, an affiliate of Dignidad Agropecuaria, also expressed concern about additional dairy imports that could arrive in the country in the remainder of 2023.

The reasons for thinking this might happen have to do with the fall in international prices of powdered milk and the revaluation of the Colombian peso against the dollar, which makes imported products cheaper.

Between January and March of this year, 24 thousand tons of dairy products, including powdered milk, cheese, and butter, entered the country. According to DANE figures, compiled by the Planning and Economic Studies Office of Fedegan-FNG, these imports had a value of USD $86.4 million CIF.

Last year, more than 72,000 tons of dairy products were imported. The figure may seem small, but translated into liters it means a little more than 600 million liters, explains Dario Coral Mora, the national executive director of Dignidad Ganadera, who adds that this is close to the total production of the department of Nariño for a year and a half. Since Colombia is a milk-producing country, one can speak of the loss of an important share of the market for national producers.

The main country of origin of dairy products arriving in Colombia is the United States. With the signing of the FTA, that country has the right to enter Colombia with zero tariffs on a quota of powdered milk and other dairy products that increases every year, until it becomes unlimited in 2026. This year, the quota is almost 24,000 tons.

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