South American Dairy Market, Facing COVID-19 Pandemic
The impact of the COVID-19 pandemic on the food industry has mainly been viewed as harmful and damaging. Yet, as data collected throughout the first half of the year proves that some regions seem to have coped with the difficulties particularly effectively.
Influence of the weather
After ongoing troubles linked to uncertain weather conditions in South America, throughout 2019 the continent underwent a major decrease in milk production this year. 2020 has been much more efficient in milk production matters for Argentina and Uruguay. In the first half of 2020, Argentinian milk production went up by +9,3% on a year-over-year basis. Meanwhile, Uruguay’s year-to-date growth clocked in at 3.9%. Such an increase in production may be noticed due to improving weather conditions, as generally, the temperature in the first half of the year positively affected pasture quality. As for many countries in the region, weather circumstances remained favorable although the main milk producer, Brazil, has faced damaging droughts. Lack of rain reflected on Brazilian milk deliveries as in June they have seen a decrease -5,74% compared to year-to-date statistics.
One of the changes, caused by lockdown measures, is the lower demand for cheese and butter. For instance, Brazilian domestic consumption of butter decreased by -2,2% over 2020. Meanwhile, in Argentina, domestic consumption of cheese declined by -1,9%, in comparison to 2019. Overall, the major decline is not visible as processors across South America successfully accommodated shifting consumer habits and rerouted milk into high-demand products. Although the situation is quite stable in the South-American dairy market, the ever-changing nature of pandemic demands constant awareness.