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News 1511 views last update:14 Jan 2016

Russia: Dairy industry facing feed price crisis

The Russian dairy industry is in crisis: raw milk production decreases while the prices are rising, according to the chairman of the National Union of Milk Producers (Soyuzmoloko) Andrey Danilenko.

The reason behind the crisis is due to the rapid rise of feed production costs which in the milk industry account for 15-20% for the last year, according to market participants. The businesses call for the government to save the industry which could face collapse without state support.

"The rise of prices for raw milk on the Russian market has been observed since the end of the last year, when it was registered sharp decline for milk production", says Andrey Danilenko. "Usually we have summer prices fall, but this year it did not happen".

According to him one of the reasons for such reduction was the poor harvest of 2012, which led to the jump in prices for feed grain and compound feed production. The situation is worsening with the delays in the payment of state subsidies. "All of this has led to the fact that milk producers are simply feeling the enormous deficit of money," - said the head of the union.

According to the market participants the rise in feed prices has been observed in all segments of agricultural businesses. However, milk producers had the lowest level of profitability so they have been mostly affected with the prices jump. Experts say that it is unlikely that in coming future the price of feed will fall. Furthermore, the continuous rise of prices will result that according to the forecasts of Soyuzmoloko the price of milk products in 2014 will rise by 15%.

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