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Localisation for Russian Dairy Industry

02 March 2015
BordBia

RUSSIA - Against a background of a devalued ruble and high inflation rates, the Russian dairy industry may be characterised as undergoing a period of localisation, according to Emily McCormack from the Moscow office of Bord Bia, the Irish Food Board.

According to the Russian Ministry of Agriculture, milk production in Russia increased by 0.1 per cent in 2014 to 30.8m tonnes.

Regions such as Altai and Bashkortistan recorded the highest increase in milk production.

Soyuzmoloko, the National Union of Dairy Producers, in a plan for the Russian dairy industry to 2020 state that they aim for domestic production to account for 78 per cent of the share of domestically available dairy, an increase on current levels of 66.5 per cent.

The Russian dairy industry is, however, in much need of reform. With milk quality and production levels both needing improvement, the industry continues to rely on imports to serve demand.

Russia was the EU’s largest dairy market in 2013, purchasing 416,000 tonnes of dairy from the EU, 63 per cent of which was cheese.

Ukraine also contributed significant supplies to the market, including 50,000 tonnes of cheese and 13,000 tonnes of whey in 2013.

The bans imposed on EU, US, Canadian, Norwegian and Australian dairy in August 2014 have resulted in imports increasing from Belarus and South America.

However, with inflation in January reaching 16 per cent and food prices continuing to increase, remaining price competitive is a challenge for exporters.

Despite these challenges, Russia remains an important long-term market for dairy, and as milk powders and lactose-free dairy products have remained outside of the sanction list, opportunities for Irish exporters still remain.

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