When will the price of milk stop in Greece?

By Giorgos Lampiris

A large part of the Greek food market and the increases that have taken place in it are currently captured in the milk zone, as sources with knowledge of the matter report in Capital.gr.

Despite the fact that the recent agreement of the beginning of August between Russia and Ukraine signed in Istanbul and concerning the safe sailing for the transport of seeds and cereals that are largely intended for animal feed, which brought a first reduction in their prices, the same sources estimate that the de-escalation of milk prices and the price that is currently reaching the refrigerators, will be slow to come.

In any case, however, there is a decrease in grain prices, after several months of upward trend, as they escalated strongly during the war between Russia and Ukraine. The opening and lifting of the blockade in the Ukrainian ports, in addition to the de-escalation of the prices that make grain and cereals available, will at the same time unblock the movement of these products internationally. It is also known that Ukraine is one of the largest suppliers worldwide, with its role being decisive in this field. At the same time, corn appears to be gradually returning to pre-conflict prices in Ukraine, while last week Chicago wheat for December delivery was down to $7.7 a bushel, maintaining a significant distance from $12.79 dollars that it caught three months earlier and returning to the levels of last February.

What keeps milk prices high?

According to the same sources, the main factor that will keep prices sharply increased, especially for milk, is the very high cost of electricity and natural gas, combined with expensive transport and the cost of raw packaging materials. In addition to the others, however, livestock farmers have already received a strong blow from the increase in feed raw materials, for a period of time exceeding one year. All the above factors combined indicate that normalization will take time to occur.

It is characteristic that the average price for the supply of PET plastic – the main material of milk packaging – in the period from August 1-23 of 2022 according to the clal.it page that records the variation of raw materials and the cost factors connected to the primary sector, amounted to 1,318 euros per ton, increased by 23% compared to August 2021. Accordingly, the rate of increase in the average price of electricity in Europe from 1-25 August 2022 was +320% (to 389.7 euros /Mwh) compared to August 2021 and natural gas by 701% compared to August 2021 (214.98 euros/Mwh for the period 1-22 August 2022).

The role of imported milk in Greece

Returning to milk, sources related to the specific sector of the industry estimate that the role played by European Union milk prices during the period of increased production, i.e. from December 2022 to May-June 2023, will show how sooner or later the price on that particular food staple will deescalate. Based on the same estimates, however, it is expected that the crisis in basic nutritional goods will have a significantly longer duration, which in the case of milk may exceed the next 24 months. At the same time, market executives express the belief that the price of corn silage, as well as raw materials for animal feed in the coming year, will also play a decisive role in shaping the price per kilogram of milk.

In essence, the formation of milk prices is decisively affected at the moment by the European milk imported into our country and the evolution of its price, since Greece covers with domestic production 50% of the quantities of milk it consumes (sheep, goat and beef), while the remaining 50% is an import product. In essence, our country is productively deficient in milk, which is no secret to all those involved in the primary sector and the dairy industry.

In practice the average price enjoyed by cow’s milk producers at the moment we speak ranges from €0.55 to €0.57 per kilo. At the same time, the price of 7-day-old fresh cow’s milk in supermarket refrigerators ranges from 1.65 to 1.80 euros per liter.