Russia’s producers forecast milk deficit in autumn

August 11, 2009 10:04 pm 

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MOSCOW, Aug. 12 – After small milk producers go out of business this autumn, Russia’s market may face the deficit of dairy products, the head of the Russian Union of Milk Producers, Andrei Danilenko, told a news conference on Tuesday.

“This summer’s results show that almost 99 percent of milk producers report loss-making work. Over the first six months of 2009 they had to reduce their livestock number by 200,000,” he said. “This is first of all linked with low purchase prices that often are lower retail ones almost three-fold.”

Danilenko noted that after big losses force small milk businesses to leave the market in autumn, new producers will have no intention to come into the industry following its unattractiveness for investment.

“The slide in production volumes will create the deficit of dairy products on the Russian market and price rise. Thus, the market will regulate itself, but the price will be rather high,” he said.

The executive director of the Russian Dairy Union, Vladimir Labinov, confirmed Danilenko’s concerns. “The going out of small milk producers from the market this autumn will be much more tangible than in the previous years.”

One of the reasons will be the growth of purchase prices for milk that is expected no earlier than in late September, one month later than usual. “It is non-advantageous for milk producers,” Labinov said noting that purchase prices would grow by 1.5-2 roubles per liter.

Russian milk producers call on the government to stimulate the consumer demand for dairy products and differentiate more qualitative products produced with the use of vegetable oils and soya proteins in order to stabilize the situation in the dairy industry. (PNA/Itar-tass)

ALM/ebp

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