The cost of dairy farming in Rio Grande do Sul increased by 2.69% in April.

The Raw Milk Production Input Index of Rio Grande do Sul (ILC) ended April with an inflationary reading of 2.69%, according to a report released by the Farsul economic team this Friday (29). There was a 2.3% increase in fuel prices compared to March, reflecting a 4.4% increase in oil on the international market, in addition to a 12.8% increase in fertilizers, mainly urea. These increases are direct reflections of the geopolitical situation in the Middle East and logistical disruptions in the Strait of Hormuz. In addition to fuel and fertilizers, there was a significant 30.6% increase in energy costs. Grains remained stable or slightly lower. In the accumulated year, there was a reversal of the price trend, which ceased to be deflationary and became inflationary, with an increase of 1.06%. The movement showed convergence with the dynamics observed in the IGP-DI/FGV, which accumulated a 0.77% increase in the same period, indicating a partial recovery of inflationary pressures at the producer level. Over the past 12 months, there has been deflation in costs of 4.7%, with a drop in the price of silage and concentrate (15.8% and 10.5%, respectively), but increases in electricity costs (30.8%), fertilizers (30%), and fuels (6.9%). However, the relief in production costs does not translate into a better situation for the producer, since the price received also fell, but at a faster rate than the costs, with a 10% drop. The decline in milk prices outweighed the relief provided by the partial drop in costs, resulting in compression of operating margins and a deterioration of the activity's terms of trade. For May, moderate inflation is expected to remain in the index. The recent stabilization of fuel prices and currency appreciation tend to limit some of the cost pressures in the short term. However, the fertilizer segment maintains an upward trend, due to the strategic importance of the Strait of Hormuz for the global supply of nitrogen fertilizers. Additionally, the recent increase in corn prices could put further pressure on animal feed costs.

This text was translated by machine from Brazilian Portuguese.