Alexandre Rocha
São Paulo – The Minas Gerais Rural Producer Central Cooperative, better known as Itambé, has won a United Nations (UN) World Food Programme tender and will be supplying 2,300 tons of powdered milk to Iraq, in 500 gram aluminized bags, a deal totaling around US$ 5 million, stated company commercial vice-president Jacques Gontijo.
The tender took place in September and Itambé is currently shipping the final batch to the Arab country, occupied by North American and British troops.
Gontijo stated that the cooperative had already participated in other similar tenders, with no success. "But then international prices went up and our milk became more competitive", he pointed out. He went on to explain that it is normally the European Union that supplies the donated products, but recently European government subsidies to agricultural products have dropped.
"What is most interesting is that the funds come from the European Union, and it is a donation from there", pointed out the executive. The packages even have EU markings.
After Iraq, Itambé is now also participating in a tender to supply powdered milk to Palestine. The result will soon be announced.
This was the first time the company sold products to Iraq, but not to the Arab countries. According to Gontijo, the cooperative currently exports condensed milk to Kuwait in bulk, where a local supermarket chain, Ali Rachid and Sons, sells the product under its own brand name.
Sales volume to Persian Gulf countries, though, is not very large. Around 40 tons per month, stated Gontijo, adding up to US$ 40,000. The company total export value is not large either, it is around 2% to 3% of total company revenue, expected to reach US$ 350 million in 2003.
Milk in Brazil
Despite producing large quantities of milk, Brazil is not a large dairy product exporter. The country imports more it exports. Data supplied by the National Confederation of Agriculture (CNA) and by the Brazilian Agricultural Research Corporation (Embrapa), shows that the country is currently the fifth largest milk producer worldwide, and should end the year with production of 21.3 billion liters.
Regarding foreign trade, according to the same publication, the country imported US$ 247 million in milk and dairy products in 2002, and exported US$ 40.2 million. "Domestic consumption is very large and imported products are very cheap", stated Gontijo. "Brazil is only a beginner on the international dairy market", he added.
He also said that the trade deficit has been falling in recent years. According to the executive, Brazilian import was around US$ 400 million four years ago. Gontijo believes that this drop in country foreign purchases is mainly due to trade barriers imposed by the government, which established a 30% import fee on European products and stipulated minimum prices for products coming from Argentina.
Based on this new scenery, he believes that within two or three years the trade balance should start leveling out, until it reaches a surplus for Brazil.
Targets
Regarding Itambé, Gontijo said that the company is already taking steps to increase export to between 15% and 20% of company revenue in three years. One of these initiatives was the creation of Serlac, a trading company specialized in dairy products, established little over a year ago by Itambé and four other companies in the sector.
He also mentioned that the company is prospecting markets in Africa and in Arab countries, such as Angola, Nigeria, Libya and Saudi Arabia. "The Arabs are large buyers of these products", he stated. The company is also increasing its condensed milk production capacity. "In condensed milk we are more competitive", he declared. "In powdered milk we already have a good production capacity", he added.
Itambé currently has, according to information of their web site (www.itambe.com.br), 29 affiliated cooperatives, 7,000 milk suppliers established in the Brazilian states of Minas Gerais (in the southeast) and Goiás (in the center-west), 2,700 employees, a line of 150 products and annual production, according to Gontijo, of around 300,000 tons.
