COUNTRY REPORT ▶▶▶
Russian dairy sector to grow steadily
BY RENE STEVENS, INDEPENDENT FREELANCE JOURNALIST T
he dairy sector in Russia compromises of around eight million dairy cows. In 2017, the total milk pro- duction was 30.7 billion kilos. There are – on aver- age – three types of farms in Russia: large dairy op-
erations with 300 to 2,000 cows, family farms with 15 to 50 cows and farmers with only one to two cows for their own use. In the largest group, around 8,000 farms are active. The country has around 24,000 family farms and more than one million small-scale farms. The largest dairy operations pro- duce around half of all the milk produced in Russia. Of the to- tal milk production, only 12 billion kilos is sold directly to the dairy processor. Since 2013, milk production has been in- creasing by 3 to 4% per year. In 2018, the growth has been slightly below average. In addition to milk, cheese is the most important product with 935,000 tonnes per year. This is followed by butter with 260,000 tonnes.
Invesment boost in agriculture Everything is for sale with money. And this phrase in particu- lar applies to a country like Russia. Over the last couple of years, the country has invested billions of Euros in expanding and professionalising the agricultural sector. Investing in agri- culture has been a policy for some time, but was boosted five years ago when the boycott of Western products became ac- tive. To date, Russia is dependent on imported milk, but the country has the ambition to be self-sufficient for dairy by 2020. The Russian Ministry of Agriculture announced last year that at least 800 large farms should be built in the coming years. The Ministry also wants to increase the average pro- duction on dairy farms to 6,000 kilos per cow per year. The import of cattle, around 35,000 heifers and cows in 2018, should help to increase livestock numbers in the country. The government offers various options for investors. This is done at provincial level. To make it easy, loans are for example pro- vided at very low interest rates and there are subsidy pro- grammes for investments. Improving the milk quality and health of the herd are also important goals. “Investors are also helped through other ways, such as when they want to ob- tain permits,” says René Kremers, co-owner of Difco Interna- tional and active in Russia for years. For Difco, he is involved in numerous new projects in Russia.
With large sums of subsidies, the Russian government is increasing milk production in a quest to become self-sufficient for dairy within a few years. However, it is unlikely that Russia can take a big role on the global dairy market on the short term.
EkoNiva and Molvest Partly thanks to the investment programmes, more high-qual- ity milk is being produced and delivered to the processors. Russian consumers are willing to pay for dairy if the quality is good. Some large dairy farms supply their own brand to su- permarkets. However, the bulk of the milk does not meet the high quality requirements. It is not even known if quality checks are done in the first place. Large companies such as EkoNiva and Molvest are the driving force behind the profes- sionalisation of the Russian dairy sector. Every year, these companies invest money in new farms, housing thousands of cows. In 2017, EkoNiva produced more than 300,000 tons of milk with 50,000 cows. These are companies with a high level of management. “They perform well and have everything in their own hands,” says Mr Kremers. The problem with the sub- stantial expansion of dairy farms is obtaining good dairy cows. These are imported from Europe to a great extent. Large foreign investors have also found Russia in the last few years.
“Hardly any dairy advisors here”
Together with three other shareholders, Sjoerd Galema owns Fryskaya bv and has been active in Russia since 2003. In Kolomna (100 km Southeast of Mos- cow), they have a dairy farm together with a Russian partner with around 600 dairy cows and 600 young cattle. Fryskaya is currently developing a plan for a new location some 1,000 km East of Moscow. There they want to milk 2,400 cows. They also do that together with a Russian partner, in this case a large ara- ble farmer. “It must become a high-tech company with maximum automation,” the entrepreneur says. Mr Galema certainly sees opportunities for Russian dairy farming but is also critical. Livestock farming in Russia is nothing like that in countries like the Netherlands. There is no dairy infrastructure and there are hardly any consultants and advisory services, so you have to be able to do it all yourself.”
▶DAIRY GLOBAL | Volume 6, No. 2, 2019 31
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