“National milk production is close to the volume of 10 years ago…”
Glauco Rodrigues Carvalho is a researcher at Embrapa, a full member of the Sectoral Chamber of Milk and Derivatives of the Ministry of Agriculture, a bachelor’s degree in economics from UFMG, a master’s degree from USP and a doctorate from Texas A&M University.
AgriBrasilis – Why is milk production stagnant in Brazil?
Glauco Carvalho – National milk production is close to the volume of 10 years ago. In the last decade, Brazilian production was greatly affected by the country’s low economic growth, as our production is aimed at the domestic market.
The recessions of 2015 and 2016 caused a sharp decline in income, harming consumption and farm profitability. Furthermore, the sector suffered strong competition from grain and beef producers, who had a better profitability scenario. Another challenge that has hampered growth is the availability of labor in the field. Milk production is a labor-intensive activity, which is increasingly scarce.
AgriBrasilis – What are the prospects for the sector in the medium term?
Glauco Carvalho – The trend is for 2025 with major challenges in terms of consumption, depending on the inflation and interest rate scenario. Looking further ahead, the national dairy sector has good prospects. We are observing rapid technological evolution in the sector, which tends to make it more competitive. Furthermore, large global producers have faced challenges in expanding milk supply, whether due to territorial or environmental restrictions. Therefore, the expansion of global demand could open up opportunities for Brazil in the medium/long term. And we also have good opportunities for growth in domestic consumption, depending on the performance of the economy and income expansion.
AgriBrasilis – Are government measures to encourage production and consumption effective?
Glauco Carvalho – The growth and development of the milk chain in Brazil has historically been guided by the entrepreneurship of productive agents, producers, dairies, consultants and input and equipment companies. Research institutes, Embrapa and universities also had and still have their contributions in the generation of knowledge, extension and technologies. The government’s direct contribution has been very small.
AgriBrasilis – What led to the increase in dairy imports? What are the main supplier countries and products?
Glauco Carvalho – The main reason was the relatively higher price in the Brazilian market, with a strong peak in mid-2022, due to the shortage of milk. Argentina and Uruguay, which account for 90% of our purchases. They took advantage of this period by putting a lot of powdered milk and cheese in here. Currently, we have players from these countries with well-structured operations in Brazil, meaning that volume has reached another level, going from 3% of consumption to around 9%.
AgriBrasilis – What factors led to increased profitability in the sector in 2024?
Glauco Carvalho – Domestic consumption was a positive factor, leaving a well-balanced year in terms of supply and demand, even with high imports. Furthermore, production costs remained relatively stable. Overall, it was also a year of low price volatility, which benefited management in the milk value chain. Of course, the reading is different when analyzing the producers affected by the floods in RS, for example. But overall, it was a good year.
AgriBrasilis – Are the milk farmers paid enough?
Glauco Carvalho – In 2024, farmers received good remuneration. But it is important to highlight that the remuneration was good for those producers with better management, control and appropriate technologies. On the other hand, there are producers losing money. Milk production in Brazil is very heterogeneous and we have seen this win/lose movement, where one portion invests and grows and the other leaves the activity.
AgriBrasilis – How does the efficiency of milk production in Brazil compare with that of competing countries?
Glauco Carvalho – In Brazil, we have to be very careful when comparing averages, due to the heterogeneity we have. But looking at a group of more efficient and competitive producers, Brazil stands out very well compared to its competitors. There are producers who are very competitive in terms of cost, with a good production scale and milk quality. But when analyzing the national average, the situation is more complex. And this has led to consolidation in the field.
AgriBrasilis – What are the contributions and research of Embrapa’s Milk Cattle Unit?
Glauco Carvalho – Embrapa Gado de Leite operates on several fronts: in long-term structuring programs such as animal and forage genetic improvement, in projects more focused on specific demands such as low-carbon milk, competitive intelligence, animal welfare, milk quality, biosecurity, etc.
The company also seeks to participate in the main forums in the sector and strengthen its relationship with technical assistance, aiming to bring knowledge and technologies to the production chain. But the challenges are enormous due to the complexity of this value chain, the breadth and variability of demands, in addition to the fragmentation of the links in the production chain, spread throughout the country.
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