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In a price scenario never seen before in this country,
the dairy industry channels its production towards
exports, neglecting the domestic market.
Historically, the sector’s best prices were to be had in
the milk sold for domestic consumption, but
international markets have brought about a substantial
change in this relationship, directly impacting dairy
industrialization, artisanal cheese production, and the
supply of liquid milk to the Uruguayan population.
The traditional competition over the domestic market
waged between the country’s dairy companies at the end
of the last century is now a thing of the past. Today,
with the international price of powdered milk at more
than 5 thousand dollars a ton, milk dehydration has
turned into the most profitable business in the
industry.
Global market outlooks indicate that this trend could
continue over the long-term, bringing significant
structural changes in both the local and international
market. The country’s dairy companies are retrofitting
at a very fast pace, among other reasons because the
equipment and machinery necessary to manufacture
powdered milk are relatively cheap and this process’
profitability and simplicity are not found in other,
more complex, industrial manufacturing processes.
Artisanal
cheese production changes its course
The competition over milk supply, therefore, has
increased significantly in the last six months,
primarily in the country’s littoral region, where
several plants offer different benefits to attract
suppliers. This situation affects Uruguay’s artisanal
cheese production, a sector that engages more than 2
thousand family producers. In the area of Colonia Suiza
there are companies offering producers 7 pesos per liter
of milk, and producers are tempted for two reasons:
because there is a huge difference between the
production processes involved, and because in order to
obtain that value per liter of milk making cheese, you
need to turn out a high quality product.
This puts Uruguayan artisanal cheese production at risk,
because many producers could abandon cheese production
and simply supply all their milk to the various
industries, leaving craft production in the hands of
only those families who have traditionally produced
artisanal cheese.
Who loses?
Small
dairy farms,
not just because this year’s production is 20 percent
less than last year’s due to bad weather conditions, but
also because the market pays a differential price to
these producers, a price below that paid to large
industrial manufacturers, as the price is determined by
the amount of milk supplied (what in the market is known
as quota milk and industry milk). This is detrimental to
small dairy farmers who supply more quota milk than
industry milk, and it favors large producers who supply
more industry milk.
And the
workers of the dairy industry,
who are also victims of this situation, as in many
places they risk losing their jobs, primarily due to the
arrival of various transnational corporations who are
only interested in our raw material.
At Ecolat Uruguay S.A (Parmalat), which was
acquired some months ago by the Venezuelan Group
Maldonado –associated in several countries with the
powerful New Zealand company
Fonterra-,
corporate directors are restructuring production. Their
goal is to strengthen powdered milk production, bringing
in new technology, retrofitting the drying equipment,
seeking to enter markets that they are not accessing
today, paying the high cost of cutting production of
ultrapasteurized milk in half, reducing cheese
production to 60 percent, closing down sweat spread
production, eliminating molten cheese production,
reducing yogurt and dessert production by more than 50
percent, and cutting butter production, among other
measures.
The company argues that market changes are forcing it to
take these measures, while at the same time it expresses
an interest in reducing the number of workers on the
payroll, through different means, such as, for example,
incentives for retirement.
While a good spring season is expected, and the sector
may possibly reach new production highs, transnational
corporations such as Parmalat are seeking to
reduce the domestic market, thus risking the
population’s milk supply and cutting down the number of
jobs. And all of this due to the international price of
powdered milk.
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