Demand for milk and milk products has been declining for the past few months. According to some estimates, the purchase price of milk, which has been increasing since 2021 due to more expensive energy products and raw materials, could decrease by around 15 percent in the coming months.
In 2021, farmers were faced with a significant increase in costs, but milk prices in Slovenia did not follow them and, for example, at the end of 2021 were behind the average costs in Europe by around 17 percent. With the war in Ukraine, the costs of energy, feed and fertilizers jumped even more.
“Last year, the costs rose significantly, by three or four times, and so the price of milk had to rise as a result, so that the farms could survive,” he explained Anton Žampaa farmer from Levanjce.
In fact, there was a specific situation in the market in 2022 where milk as milk began to be in short supply. At a time when global markets were in great demand for all segments of dairy products. There was a specific situation where demand started to drive prices up,” said the director of the Ptuj Dairy Association Janko Petrovič.
From March 2021 to December last year, milk prices rose from 33 to 56 cents per liter. Constant growth has led to a tipping point. Due to good prices, the supply of milk increased at a time when the consumer began to behave differently due to the rise in the cost of living.
“We have a situation where, on the one hand, milk production is increasing, otherwise with mild indices, percentage, two, three. Meanwhile, on the other hand, we estimate that the consumption of dairy products, which is our end market, is declining,” says Petrovic.
The difference of 23 cents, which occurred in the purchase of milk in the last year, is the basis for setting prices in the rest of the food chain.
“Probably some intermediaries, some trade, production also collects more, because we are always the last in the chain and we are always the weakest link” says Žampa.
Will the anticipated cooling also mean lower prices in stores? But that’s another story.