In August, the index of conditional profitability of milk production increased by 3.7%

In August, the index of conditional profitability of milk production rose by 3.7% after a record increase of 10.5% in July.

This was announced by Andriy Yarmak, an economist at the Investment Department of the Food and Agriculture Organization of the United Nations (FAO), on his FACEBOOK page.

it is worth noting that MMR is the ratio of the price of extra raw milk to the cost of a concentrated feed ration in commercial farms. The dynamics of UMI very clearly shows changes in the profitability of milk production, regardless of inflation and devaluation, because these two important factors are taken into account in the equation through changes in feed and milk prices. At the same time, depending on changes in efficiency levels, UMI may grow faster or slower on individual farms.

“More than half of the growth was provided by the increase in the price of milk (by 1.9%), which always gives the producer much more moral satisfaction than cheaper feed. The price of bark also fell, as much as “by as much as” 1.7%, however, feed wheat rose in price by 20% within one month, and sunflower meal fell in price by 10% at the same time,” says the economist.

According to him, revenues in August 2021 were only 3.7% lower than in 2020 in the same month, which is not bad, because at the beginning of the year the difference reached 44%. But it was the second worst August in the last 5 years in terms of milk production profitability.

“The first 7 months of 2021 allowed our dairymen to earn 24.4% less than a year ago in the same period. And so far this is still the worst year in the last 5 years! Worse with income was only in 2016,” adds Yarmak.

The expert notes that, as a rule, UMI sharply increases in September. The average increase in UMI over the past 10 years in September was 10%, but last year, for the first time in September, UMI decreased. But it was a pandemic-unstable year. “Also, the external factor is generally positive. Over the past month, global markets have mostly been rising slightly. True, this is becoming less relevant for us, because we EXPORT little and import little, relatively, of course, ”summed up Andriy Yarmak.

agravery.com