Lower Russian Milk Production Forecast

RUSSIA - Following lower output in 2010, Russian milk production is forecast to decrease by a further two per cent in 2011.
calendar icon 4 April 2011
clock icon 2 minute read

As a result, Russian imports are expected to increase further in order to meet domestic demand.

The 2010 drought accelerated cattle slaughter rates and decreased current and future feed supplies, thereby negatively impacting not only milk supply but also on productivity for 2010 and 2011. The cattle population has decreased by 600,000 head, leaving dairy plants and production facilities with a deficit of milk for production purposes.

Butter production fell by 20 per cent during the 2008 – 2010 period with milk powder output down by 44 per cent in the three years to 2009. Cheese production has also declined.

Cheese production in Russia is also decreasing because of market saturation due to the availability of imports. Russia remains the largest importer of cheese in the world. Between September and January last year Russia imported more than 200,000 tonnes of cheese. The principal cheese supplier is Germany. Around 40 per cent of EU cheese exports go to Russia. Russia is expected to remain a key butter importer as domestic production of butter continues to fall. The main exporters of butter to Russian are Belarus, New Zealand and Finland.  Kerrygold is present in the market and further product launches planned for early summer.

Trade sources suggest that Russian cheese imports from the EU could rise further as cheese supplies from Belarus, Ukraine and Lithuania have fallen sharply over recent months. This has led Russian importers to look to German and Austrian suppliers, especially for Gouda and Edam cheeses. The prices for Gouda and Edam from the EU have been rising by around five per cent monthly in recent months. As Russia relies heavily on cheese imports, buyers are likely to look to other European suppliers to meet demand.   Ireland currently does not export cheeses to Russia with difficulty in getting a certificate being cited as the main barrier. 

Despite the increased demand for imported dairy products, market access remains tight. Russia increased duties during a period of increasing prices and has favoured sourcing from regional suppliers and importing from its Customs Union partner, Belarus. In the first seven months of 2010 Belarus accounted for 30 per cent of Russia’s cheese imports, 46 per cent of imported butter, 75 per cent of milk powder and 89 per cent of whole milk imported to Russia. Russia is likely to continue looking first to Belarus for supplies in 2011.

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