In the month of September the payments of the loans of Conaprole by drought who suffered the Uruguay, an event that was affected by the drop in the price of milk determined by the board of directors of the cooperative company and which compromises the dairy sector.
In an editorial publication in Todotambo magazine, the member of the Association of Tamberos de Canelones (ATC), Justin Zavalaassured that the dairy sector is in a “financial bottleneck” caused by the maturities of the first payments for the loans provided by Conaprole to alleviate the effects of drought.
A drop in prices that complicated the sector
In mid-August, the authorities of Conaprole reported the drop in milk prices and did not rule out that there are new reductions in the course of the year. From the dairy cooperative they argued that the decision was based on the complexity of the situation in foreign markets.
“The average price for August, more or less, will be around 13.80 pesos per liter,” said the president of Conaprole, Gabriel Fernandez. In the last month of the 2022/2023 financial year ended in July, the dairy company paid an average of $0.46 per liter of milk sent.
Faced with this, the ATC representative assured that there was no surprise among the dairymen due to the decision but that “the general feeling of the producers was of uneasiness and frustrationsince they saw how the possibility of making a difference in a normal spring was getting into their hands, something that has not happened for three years”.
On the other hand, Zavala assured that, according to the records of the National Milk Institute (Inale)there has never been such a significant drop in prices from one month to the next and he also lamented the fact that there could be another drop in prices, depending on how the international markets behave.
Pay a debt with few resources
The ATC member assured that in the spring the first payments to the cooperative companythe result of loans provided to producers who were in financial trouble due to the drought suffered by the country.
The total provided to the producers is around 20 million dollars, which allowed the purchase of silos, bales and rations. With that, Zavala assured, the message of Conaprole was clear: “There is support for what is needed to produce, with payment options until the end of the year”, although they did not take into account the possibility that milk prices would have to fall, which would complicate the payment of million-dollar loans.
“We have a problem that directly affects 50% of the enrollments and it is likely that a good part of the other 50% will have to negotiate with banks and/or with private creditors”added the ATC representative.
Zavala questioned the position of the company by remarking that the loans had an implicit message “which was to maintain the conditions under which the financial assistanceproducers were never told ‘I’ll lend you this money, but when you’re going to pay me, I don’t know how much less your milk will be worth’”.
In conclusion, the member of the sector assured that a complex year is approaching, not only nationally, but also internationally, since the Uruguay is waiting for what will happen with the markets of China and Brazil – one of its main buyers – as well as dealing with the possibility of new markets appearing.
“Let’s take it one step at a time, first solve the financial bottleneck, second give producers the confidence to fully capture what promises to be a good springThird, be aware of all those who occupy decision-making positions that we cannot look to the side and think that we have no responsibility for the problem”, Zavala assured.