Two years ago, Cepea announced a change in the methodology of the average milk price paid to producers. We have learned significantly about transparency and team work due to this decision, which is extremely necessary to increase data solidity – on average, there are 25 thousand data per month.
From that time onwards, there has been a lot of work with different teams to consolidate the so-called “Pilot Project”, a partnership involving Cepea, OCB (Organization of Brazilian Cooperatives) and Viva Lácteos. If, on one hand, we have made a significant progress, on the other, future challenges in order to obtain a good sample to our research are now clear. Moreover, the role of Cepea in the process of helping to build an effective coordination between the segments is even more evident.
The milk price gathering by Cepea has started together with Cepea’s history, back in 1986. In that time, collecting and analyzing data were different (and harder) processes compared to what is observed today. Cepea was a pioneer forming a net of collaborators, keeping the necessary infrastructure to perform this task and developing solid methodologies for the research. Many professionals worked in Cepea’s Milk Team, improving both activities at the Center and themselves, preparing them for new challenges. It is important to mention that this is an important mission for Cepea: training professionals to reach their best.
Experience is the aspect that leads Cepea to have milk in its list of research. We have the most complete database for milk, byproducts, inputs and production costs in Brazil. We rely on a network of collaborators who allow us to make questions, investigate and validate hypothesis. We gather professors and researchers that dedicate their careers on providing information that favor the development of this sector in Brazil, along with the mission of a public university in which Cepea is established: teaching, research and extension.
Dairy agribusiness system has several challenges ahead, such as to increase productive efficiency and the quality of both raw material and dairy products, improve the management of rural and industrial companies and create solid strategies to manage economic risks of the activity. They are multifaceted challenges that require coordinated efforts to make competitive strategies feasible in a scenario that is constantly changing.
Therefore, both generating and sharing information are essential to understand the market dynamics. However, Cepea has been taking a step further.
Understanding places in both space and time of agents who trade, the asymmetry of information between them and difficulties they have to make aligned decisions is essential. In the dairy agribusiness system, as supply and demand relations are complex, many market trends are delayed to trades between producers and the industry. The market scenario is heterogeneous among players, which results in doubts and uncertainties about the aspects that affect the chain.
Therefore, it is important to mention that information about the market is more than a reference. Institutions like Cepea have favored several farming activities, including the dairy agribusiness system, being a focal point for the increasing in coordination between agents and helping to understand possible bottlenecks for the development of the sector.
Cepea has established long-term partnerships with CNA (Brazilian Confederation of Agriculture and Livestock), OCB (Brazilian Cooperative Organization) and Viva Lácteos, which are essential to support research on production costs, trades between the industry and producers and the dairy market. It is extremely important to anticipate trends, since the price to producers depend on trading the final product. Moreover, the milk spot market is also monitored every fortnight.
Moreover, data could not be generated without the voluntary participation of cooperatives, dairy industry and producers who share information with Cepea, protected by our confidentiality. In spite of that, it is still a challenge to increase the network of collaborators.
Information, likewise milk itself, is perishable. As a result, the sector needs to work as a group to generate useful data in a transparent way. This effort has been improving throughout the years, and the fact that collaborators recognize the importance of monitoring the market is a solid basis to coordinate players’ activities. It is hard to project the future without understanding the past after all.