Dairy farmers foresee a complicated outlook in 2022 due to rising costs and lower consumption

The potential war between Russia and Ukraine that triggered increases in the prices of raw materials injects greater uncertainty in the world economy, which complicates the outlook for 2022 for the dairy industry in Mexico, with a drop in consumption, the demand for milk and its derivatives and a decrease in purchasing power.

This was projected by Mariano Salceda Servín de la Mora, president of the National Chamber of Milk Industry (Canilec), mentioning that in the face of unforeseen events, “today we have the potential war between Russia and Ukraine, where oil prices are going up, gasoline prices, including in Mexico, are already up; a total uncertainty of what is going to happen in the (financial) markets and raw materials, which forces us to think, not in a capacity for resilience, but in a capacity for survival”, he warned.

Within the framework of the Forum “The Perspectives of the Dairy Market, 2022 edition”, organized by Canilec, its leader anticipated that this year “will be very complicated for the dairy sector in Mexico, since there will be a drop in consumption, demand , and purchasing power hit, where the reorganization of market players begins”.

Mariano Salceda expressed his concern that the sector has already been hit by the consequences of the Covid-19 pandemic, in which Mexican families chose to consume free-brand milk over brands participating in the pasteurized formula market, as a result of the economic crisis and the lower purchasing power.

Just the case of yogurt, its consumption reduced 42% during the pandemic, as well as cream, which due to the inflationary rise has caused an increase in costs. “In the market for fresh milk in Mexico, we have increases that arrive in February between June of last year and February, of up to 20% derived from the costs of milk production,” he said.

The president of the Canilec added that the costs of the inputs used by the industry such as plastics, paper (cardboard) and aluminum foil, the caps of the containers, have had a substantial increase, in addition to the fact that powdered milk and creamthe Butterhave increased up to three times the average price that it had in 2020. “This causes the industry to have cost increases,” Salceda pointed out.

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