COUNTRY REPORT ▶▶▶
Russia’s dairy sector firm in the face of Covid-19
Despite the back and forth of quarantine restrictions in Russia to slow down the spread of Covid-19, domestic dairy production keeps growing. To some extent, this is associated with state aid. BY VLADISLAV VOROTNIKOV
D
The Russian gov- ernment in- creases state aid to the dairy industry.
uring the first nine months of 2020, Russia pro- duced 25 million tonnes of milk, up 2.7% com- pared to the same period of the previous year, Dmitry Patrushev, the Russian Agricultural Minister outlined during a meeting with Russian dairy companies on 1 November. In 2020, the country’s milk production should climb to 32 million tonnes and in 2021, an additional 500,000 tonnes will be produced, Patrushev says. “It is worth noting that the coronavirus-related restrictions have not brought a negative impact on the Russian dairy in- dustry. On the contrary, we see positive dynamics in dry cheese, butter, dry milk and other product categories. We expect these trends to continue,” Patrushev says. Basically, agriculture remained one of the few industries where the coronavirus pandemic has not caused a major in- terruption. However, Russia has not escaped the worldwide
coronavirus recession, with GDP set to fall by around 4–5% this year. This forecast is not final since the second wave of the Covid-19 pandemic has proved to be more widespread and more deadly, pushing regional authorities to impose new restrictions in the hospitality segment. However, with the achieved growth, Russia is getting closer to surpassing the Russian food security objective, under which the self-sufficiency level of dairy products must be above 90%. In 2020, the Russian Agricultural Ministry estimated this figure at 85%, Patrushev adds. The Russian government is continuing to focus on the coun- try’s dairy industry during these harsh times, according to Pa- trushev. In 2020, the authorities allocated RUB10.6 billion ($ 150 million) in the form of subsidies to dairy companies, RUB2.6 billion ($ 30 million) more than in 2019, Patrushev said. Also, another RUB13.9 billion ($ 185 million) was allocat- ed to subsidise interest rates on loans; this figure is also substantially higher than in 2019, Patrushev adds.
Weakening market The Covid-19 pandemic has sent the Russian ruble’s ex- change rate soaring. Since the beginning of the year, the national currency has lost 30% in value, undermining the Russian population’s purchasing power. According to Sergey Anisimov, director of the Stavropol dairy plant, the currency fluctuations have been a major blow for the company, which has paid for equipment in hard currency purchased under a modernisation campaign in previous years. “However, for our company, the more important conse- quence is the total fall of Russian citizens’ purchasing power,” Anisimov says. The pandemic has not gone unnoticed in the Russian dairy market. Although there is no exact statistical data, market an- alysts believe that sustainable production growth has been accompanied by weakening demand. Due to this, dairy products began piling up at the manufacturers’ warehouses. As of mid-2020, the stocks of butter, milk powder, whey and cheese products in Russia were significantly larger than in
26 ▶ DAIRY GLOBAL | Volume 8, No. 1, 2021
PHOTO: VLADISLAV VOROTNIKOV
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36
