The formal collection of milk was 811 million liters between January and March 2024, 7.5% more than in the same period last year.
Photo: Courtesy Asoleche
The dairy sector is responsible for a huge amount of products that Colombians consume every day. Despite its relevance in the family basket, milk consumption has fallen over the last two years. This has put the industry in trouble, which has high inventories of this perishable product.
We spoke with Ana María Gómez Montes, executive president of the Colombian Association of Milk Processors (Asoleche), about the challenges and problems that exist in this sector, key for agriculture, but also for the nutrition of Colombians.
What is the biggest challenge facing the sector?
An extremely important challenge is encouraging consumption and improving nutrition. Consumption has fallen in the last two years: in 2022 it fell by 9%, in 2023 it fell by 6% and so far in 2024 the recovery has been very modest. So, this consumption must be improved for two reasons: to economically favor the chain and for nutrition, to help meet the second Sustainable Development Goal (SDG) of zero hunger.
What are the reasons that explain the drop in consumption?
There are several factors that explain the fall and difficult recovery. The main one is not exclusive to the dairy sector, it is about the economic situation of the country. The purchasing power of the consumer has been impacted and the purchase of this component, which is so important in the basic family basket, has been reduced. In addition, we are seeing new trends or fashions that discourage the consumption of dairy products and recommend other plant-based drinks.
In the last year food prices have been falling, there are companies that have chosen to reduce the cost of their products. What has happened to the cost of milk?
Between 2021 and 2023, the price index that the industry paid to the producer increased by 90%. That is very high and occurs because at that time the global impact was reflected: the post-pandemic and the war between Russia and Ukraine increased the cost of inputs throughout the chain. Despite the difficulties, the industry made a very important effort not to transfer all that impact to the price of the final consumer, because the cost structure was very large.
Despite this, the consumer price index (CPI) for milk, in the same period, increased by 65%. In the last year, the price of milk has been more stable and has only risen 2.1%, according to the National Administrative Department of Statistics. While between 2022 and 2023 the increase had been 27%. The industry is making great efforts because it understands well that, if consumption is not reactivated, a domino effect is generated that harms everyone, including the rancher.
Is there any possibility that the industry will lower prices to encourage consumption?
As a union we cannot talk about the strategies of each affiliate. What I can say is that there is an additional factor and that is inventories. In this there is an average of 23 to 30 days of inventory, a very high number for a perishable food. We are talking about more than 200 million liters of milk equivalent in stock. Between February and March there were significant discounts in chain stores to rotate inventories. In addition, last year some taxes were imposed on ultra-processed products, which means that the industrial transformation structure is supporting higher pressures, making it more difficult to see a decrease in consumer prices.
What other strategies do you have to encourage consumption?
We are working on a national consumption incentive campaign, like other products have. To do this we need an integration of the entire chain, because doing it separately will not be equally effective and a fairly high investment is required.
Regarding inventories, why are they so high and what are you doing to reduce them?
Basically, the reason is the drop in consumption. What we have done is give it alternative uses, pulverize the milk and sell it as raw material for other products such as cookies, candies and chocolates. And we also seek to promote new portfolio products so that inventory can be rotated.
What is the relationship of the industry with the informal milk market?
In Colombia, about 50% of milk production is purchased and processed through the informal channel. That makes the quality not good. To the extent that small communities can be helped to associate and industrialize so that they generate derivatives that absorb production when consumption falls.
Informality is a structural problem. We as the formal part, rather than attacking this phenomenon, are willing to generate programs that help make it productive. Colombia is not self-sufficient in milk, we only produce 89% of what is consumed in the country. To the extent that informality gaps can be overcome, productivity and quality are improved. This requires the support of the entire sector and the Government.
The Colombian Federation of Livestock Farmers (Fedegán) is emphatic in its dissatisfaction with the prices they give to producers and the losses that this generates. What is the industry’s perspective on this?
Fedegán is a colleague union with whom we work a lot in the programs that we are leading from Asoleche. Its president, José Félix Lafaurie, has spoken that they pay around $1,000 per liter, but it is with respect to all national production. We, from formality, pay the price regulated by the Government. In March 2024, the base price per liter, with mandatory bonuses, stood at $1,840 national average, while with voluntary bonuses it reached $2,042 per liter. But we cannot buy from dairy farmers who do not guarantee the health and safety of the product because we must comply with health laws. What they can do is sell it informally at half the established price.
In which places in the country is there the greatest formal milk collection and why?
The first is Antioquia with 37%, followed by Cundinamarca with 28%, Valle del Cauca (8%), Boyacá (8%), Cesar (4%), Nariño (4%) and Caquetá (3%). It has a lot to do with access in terms of road infrastructure, the breeds of cows and their diet.
What is your commitment to the development of products derived from milk?
The formal industry dedicates a lot of time and resources to innovation and development of new products. Milk is a very versatile food and has a wide portfolio. We have a varied sector, although we have a long way to go and develop when we compare ourselves with the North American and European industry, but we are definitely on the way.
What is your goal for the 11th International Dairy Industry Congress that begins this week?
The main objective of the congress, which takes place in Medellín on June 5 and 6, is for it to be a space for the integration of the entire dairy chain in Colombia because the lack of integration of the entire chain is leaving a lot of value on the table. Our theme this year is “Between the field and the consumer: charting the path for the progress of agribusiness and nutrition.” During the meeting we will address topics such as the development of the sector, the challenges and opportunities it faces in the current context and disseminate the nutritional benefits that milk has for health.
