Dairy rivers shallow

Will Belarus be able to help Russia cope with the deficit of milk?

Will Belarus be able to help the neighbors to eliminate the deficit of milk?

Dairy River of our eastern neighbors turned back retreating. Last week it became known that the milk, butter and cheese in the Russian retail market in the near future may become more expensive, and at once by 10 %. Since these estimates were made by the Ministry of Agriculture and the branch union of milkmen. In their view, the coming rise in prices caused by a decrease of government subsidies and the reduction of livestock. The current situation allows Belarusian dairy establishments to increase the supply to the neighboring country, the more that Belarus is already considered one of the main exporters of milk and cheese to Russia.

Each year, in June and July, in period called the «big milk», selling prices of Russian producers has traditionally fallen by about 20 %. This year, the fall in prices was not recorded. Do not get cheap raw materials from producers, processors of milk notified the authorities (milk is a social product, and its price is regulated by the government) that prices would rise by 5 % in August and by another 5 % – until the end of the year. They say that the accession to the WTO has put Russia in a difficult situation. Reduction of customs duty has struck strong by «milk» positions.

According to Deputy Minister of Agriculture of Russia Ilya Shestakov, in the first half of the milk production on farms decreased by 5,9 %, while the number of cows has decreased by 2 %. In Belarus, the milk production is also falling, but not as much as the Russians.

Unlike Russia, which has no opportunity to properly subsidize their producers because of its commitments to the WTO, Belarus in this issue is more mobile. In earlier this month, the Ministry of Agriculture and Food of Belarus increased the recommended minimum export prices for dairy products. And, as the data of «Belarusian Universal Commodity Exchange», export prices for dairy products continues to grow. However, it should be recognized: Belarus, even if the increase in quotas for the supply of milk products to the Russian market, which was agreed at the end of last year, is unlikely to meet the needs of the Russian market. In total, Russia`s demand for imported dairy products in milk equivalent approaching 9 million tons per year, of which only 4,2–4,5 million tons can be closed by Belarus.

Meanwhile, Belarus is the largest importer of dairy products in Russia. As a result of January to May this year, our share of milk imports amounted to almost 75 %. For comparison, share in the market of imported milk of the Finnish company, whose follow us on volumes of supplies, is 7,8 %. But on products with higher added value we have a much more modest position. So, on the market for butter Belarusian imports are about one-third, and cheese – about 15 %. As for the «back» side of question, the lion`s share of dairy products of Belarusian enterprises is sent to the Russian market. The second largest volume of consumer is Kazakhstan.

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