They will install an executive table to correct the dairy sector

The Association of Dairy Farmers of Peru (Agalep) and advisers to President Pedro Castillo agreed to form an executive board headed by the Presidency of the Council of Ministers (PCM) to solve the crisis suffered by 30,000 livestock families due to the lack of storage and differentiated treatment of Gloria, Nestlé and Laive compared to imported inputs.

“We have presented our requests and reports, and the only concrete thing is the executive table. This is a first step,” the president of Conveagro, Clímaco Cárdenas, told La República.

agenda priorities

According to Gianni Simoni Rosas, president of the Regional Milk Council of Arequipa, the issues that should be prioritized at the executive table are: the non-recombination of milk and establishing a tariff -of 40%- for imported products such as powdered milk, anhydrous fat and other derivatives that currently enter from abroad for the marketing of dairy productsand for which the industry pays S/ 2 per kilo -in the case of powdered milk-, when local production continues to be paid up to S/ 1.30 per liter.

This figure represents “an abuse of a dominant position due to supplier discrimination”, according to the general director of livestock development of the Ministry of Agrarian Development (Midagri), Carlos Lozada.

On the other hand, both Simoni and Cárdenas are aware of how complex it would be to apply a tariff rate – withdrawn in 2008 – because Free Trade Agreements (FTA) are reluctant to these barriers.

“Peru is one of the few countries that still misuses the term ‘milk’. In a jar, there is approximately 60% of the national product and 40% imported. It is requested that the product be made with 100% Peruvian milk,” said Simoni, who recalled that the legislative project that prohibits the use of powdered milk to make evaporated milk must be updated, which has been truncated since 2017 after being observed by the executive at the time.

damage details

For a year and a half, dairy farming has suffered from the increase in international prices for corn and soybeans, summarizes Lozada.

This situation is aggravated -he adds- because the local industry unilaterally sets prices, avoiding that the producers who use these grains transfer the extra cost to their pockets.

“In the first decade of this century, when there was tariff protection and there was an ad valorem tariff of 20% on milk imports and the price band also worked, the stock of fresh milk grew at 10% per year, to the point that we almost closed the gap of dependence on imported milk and only 8% of the industrial need was recombined. But nevertheless, in 2008 the tariff was unilaterally eliminated and the collection was reduced from 10% to 1.5% in the following decade”, exposed.

These changes caused the average variation of powdered milk imports to rebound from 2010 to 15.7% per year, which postponed the interest in promoting the production and purchase of national milk (see infographic).

Lozada explained that 99% of the dairy farmers “is losing a lot of money” in a scenario where the international price of milk rose 40%, and in its price in the last fortnight of January it grew by 8%.

“That the national supplier be paid almost 40% less than what they pay the international supplier. This condemns us to rely more and more on more expensive imported milk. We do not even give in for a more efficient supply”, he sentenced.

reactions

Carlos Lozada, Midagri official

“While the industry pays for national milk from S/ 1.20 to S/ 1.30 on average, for each imported liter they pay S/ 2.00. An abuse of a dominant position is set up due to supplier discrimination”.

Gianni Simoni, livestock manager

“We have a production of 2.5 million liters, and we consume 5 million. With what is missing they put something else in our stomach. We have the capacity to produce more, but we are broke.”