Russia is expected to lower prices for dairy products due to export supplies from Belarus

19.04.2017

The minimum recommended export prices for butter, skimmed milk powder and other dairy products are reduced on average by 5-10 percent. Russian producers in the fight for the consumer will have to enter into price competition with their neighbors, experts say.

As it was reported by the Ministry of agriculture and food of the Republic, the butter with fat content of 72.5 decreased in price by 4.8 percent up to 300 Russian rubles per kilogram, a similar product with fat content of 82.5 percent fell by 4.3 per cent – up to 330 rubles. In addition, the minimum recommended export price for skimmed milk powder and milk whey protein concentrate fell by 11.4-11.8% - up to 155 and 150 rubles respectively. Meanwhile, experts remind, the decline in prices for milk powder and butter happens for the second time, earlier they were reconsidered on March 16.

We will remind that after in August 2014, Russia imposed retaliatory sanctions on agricultural products of a number of Western countries, Belarusian producers quickly filled the vacant niche. And if in 2013 the export of Belarusian dairy products took 42 percent of the total imports to Russia, last year this share doubled. And it is possible that after the price reduction supplies can only increase.

"Belarus has economic opportunities to reduce export prices as during the last few years serious work was carried out to improve the productivity of dairy herds, and there were introduced quality parameters for raw milk at the level of European standards, - explained the Head of the company Petrova Five Consulting Marina Petrova. - In addition, in connection with the reduction of consumer demand in Russia, Belarus will be able to maintain or even increase the volume of supply, and to prevent the swithing of the Russian consumers to cheaper products with vegetable fats".

However, the National Union of milk producers (Soyuzmoloko) believe that the decrease in prices is the forced reaction of neighbors to the current market situation. "First, we are approaching the season of "big milk", when the increase of production volume while reducing its cost already undercuts the prices, - explained in the Union. - Secondly, supply from countries that were not subjected to counter-sanctions (New Zealand, Turkey, Uruguay), is now often more profitable and attractive to our importers". By the end of last year the Belarusian export increased in price so much that they began to lose to competitors from these countries. And after this reduction they simply returned to the average market level.

Whatever it was, the price of milk in Russia in the near future will not grow and can even go down. Even a little. "Our producers will have to either sell short or redistribute the raw milk to other market segments, - said Marina Petrova. Otherwise they may lose market share". If the wholesale prices of butter 82,5% fat in Russia at the beginning of April amounted to 419 rubles per kilogram, the minimum price for Belarusian butter with the same fat content will be 330 rubles, the expert reminded. The difference is obvious.

In Soyuzmoloko they give a more discreet assessment of the prospects. According to their analysts, the domestic market "is expected to reduce the growth rate of the price level". In addition, consumption of dairy products by the population continues to fall due to the decrease of purchasing power. Therefore, further increase of prices is limited by the demand.

At present milk remains one of the leaders in the price hike - 2.5-3.2 percent since December 2016. It was overtaken by butter - 5.7 percent. Cottage cheese is somewhere in the middle - 2.4 percent. Other products even became cheaper. And since the beginning of the year inflation was only 1.1 percent, more than twice lower than in the same period a year earlier.


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