AGRIndex: Less Cows, Expensive Milk!

AGRIndex: Less Cows, Expensive Milk!

AGRIndex: Less Cows, Expensive Milk!

The FINANCIAL -- In March 2018, DAIRY prices continued declining trend — the drop was as low as -7.1%, compared to the last month. Due to this change, the gain in the year-to-year AGRIndex also shrunk and reached +3.7% — the lowest figure since February 2017.

Although the month-to-month decline in DAIRY was significant, the negative direction of the change was expected given that there exists clear seasonal pattern tied to the active lactation period. Active lactation starts in the mid of spring and lasts till the mid of autumn, while during the rest period of the year lactation is relatively low, that limits the supply of domestically produced milk on Georgian market and pushes prices up. More interesting is to find out why on average the DAIRY prices gained roughly 8% of their penultimate 12 months’ values in the last 12 months’ time. According to the GeoStat primary data, only 502 million litres of milk was produced in Georgia in 2017 versus 540 million litres in 2016. It is a result of declined number of dairy cows in the country — according to the GeoStat primary data, in 2017 the number of dairy cows and buffaloes (462 800 heads at the end of the last year) decreased by more than 9% compared to the previous year (509 300 heads at the end of 2016).

On the product level, in m/m terms all four dairy products of the AGRIndex basket, except matsoni, became cheaper in March 2018; the biggest decline was observed in Georgian cheese (-8.5%) prices. In y/y terms, all four products became more expensive with matsoni (+11.2%) being the biggest price-gainer.