Russian dairy sector takes mega steps

The Russian Ministry of Agriculture recently announced that the self-sufficiency rate in milk last year was 84,1%. Although the country aims for a percentage of at least 90%, it clearly shows that Russia is taking mega steps in the development of the dairy sector. For example, the gross milk yield on dairy farms increased last year to more than 32 million tons, an increase of 855.000 tons compared to 2019 and the best result of the past 10 years. The average milk yield per cow also rose to a record of 6,6 tons.

The export figures don't lie either. In 2020, Russia exported more than $300 million worth of dairy products. A growth of 12% compared to a year earlier. In five years, exports to foreign markets increased by no less than 33%. The Ministry of Agriculture also expects strong growth figures for this year, which could increase gross yield to at least 32,6 million tons of milk.

Plenty of state support
It is not surprising that the Russian dairy sector can take such big steps so quickly. The government fully supports the sector. For example, last year 28,3 billion rubles were invested in the sector. This amounts to an amount of more than €315 million. This year the support would be less. However, the government is shifting the focus to other tools. For example, dairy farmers should be able to apply for loans more easily to purchase feed.

The latter is currently one of the priorities, because feed prices have risen sharply. Russia's most important concentrate is corn (meal) and its domestic price has risen by more than 30% in recent weeks. The price of the most expensive compound feed in southern Russia now amounts to €221 per tonne and for the cheapest compound feed products a dairy farmer in Siberia pays an average of €146 per tonne. Analysts expect that if this increase continues, the milk price will have to increase by 5%. A scheme to make loans for feed purchases easier should prevent this.

In addition, the Russian government has announced that it wants to focus more on processing this year. After all, scaling up production means that processing capacity must increase and existing locations must be modernized. Russia will develop and provide various subsidies for this during the course of the year. The amounts have not yet been announced.

Consumption remains stable
Despite the decline in income among many Russian households, consumption of dairy products has remained fairly stable in recent months. Russians now consume more than 236 kilos of dairy per person every year. No major changes are expected in the coming months. The combination of less money to spend and more attention to health means that Russians spend their disposable budget in a different way than before. According to the government, dairy will remain part of the most important expenditure.