Colombian Dairy Farmers Face Stark Price Declines Amid Rising Consumer Costs

Colombia's Dairy Farmers in Crisis

In a concerning development for Colombia's dairy industry, the price paid to farmers for a liter of milk fell by 8.36% last year. This decline follows an additional drop of 10.8% in 2023, summing up to a staggering 19% decrease over the past two years.

Consumers Paying More

In stark contrast, the price consumers pay for milk increased by 12.2% in 2023, with only a minimal reduction of 0.3% in 2024, leading to a price gap exceeding 31% between what producers receive and what consumers are charged.

Industry Challenges

This situation has left dairy farmers facing challenges, despite a potentially strategic opportunity to boost demand by lowering consumer prices. Instead, the price differential favored retailers and the dairy industry, exacerbating the pressure on farmers.

Seasonal Reliever: The Summer

As summer arrives, a temporary relief is seen with a marginal price increase and decreased inventories. However, the perpetual reliance on seasonal changes for crisis management poses long-term sustainability risks for the industry.

Free Trade Agreements Impact

With imminent free trade agreements allowing unrestricted milk powder imports from the U.S., structural strategies are essential to remain competitive. Strategies suggested include local business fairs, establishing dairy plants in key areas, and boosting exports.

Call for Structural Change

As Colombia faces free trade impacts and climate change, the call for strategic adaptations in the industry grows louder. These include investments in the dairy value chain and diversifying production to stabilize farmer income.