Homepage  Homepage     Search on site  Search on site     To write the letter  To write the letter     Site map  Site map
Agro Perspectiva
We are on: 

Home > News

For the first time in at least a decade, milk production became more profitable on average than poultry or grain production in Russia

02.01.2018 16:30 "Agro Perspectiva" (Kyiv) For the first time in at least a decade, milk production became more profitable on average than poultry or grain production in Russia. Global high prices for milkfat, the stronger ruble, and reduced cost of capital allowed local producers to improve margins, and encouraged greater production of dairy products. However, soft demand at the consumer level persists. The resulting high stocks of butter, Whole Milk Powder (WMP), and Skimmed Milk Powder (SMP) will likely limit further production growth in 2018 until continuing economic improvement for consumers rebalances demand with supply later in the year. Market consolidation and greater efficiency at commercial dairies increase with investor interest in the sector, but imports remain high for now.

Executive Summary:

Because milk farms depended on state subsidies rather than consumer demand and did not generate profits for decades, Russias milk production sector remains far less modernized and consolidated compared to pork, poultry, sugar, and grains. The key weakness of Russias milk production sector is its inefficiency, but the high cost of capital has long constrained development; over time these factors resulted in high milk production costs in Russia compared to the countries that export processed dairy to Russia. As a result, the markets for raw milk and processed dairy products remain strongly dependent on the price of imports. World prices for milkfat and proteins continue to influence Russias market in spite of the counter sanctions. The share of imported processed dairy from Belarus and other nonrestricted suppliers remains high because the total capacity of all Russias milk farms remains below the countrys demand.

For the first time in at least a decade in Russia, milk production was more profitable than poultry or grain production in January-September 2017. Global high prices for milkfat made milk and dairy produced in Russia price competitive to imports. Milk remains dependent on imports so further growth of industrial milk production is possible and could come at the expense of imports. However, world market experts anticipate some decline of world butter prices in 2018, which would affect forecasts.

Per cow yields at commercial farms continues growing. The share of industrially processed milk is increasing at the expense of shrinking on farm consumption of fluid milk. The top 50 biggest farms, which currently account for 4.8 percent of total milk production, will continue to grow and

increase their share in the market. Good financial performance in the sector in 2017 may stimulate investorsinterest and market consolidation activities in the sector in 2018.

Responding to improved profitability due to high world prices, producers increased the output of butter and milk powders January-September 2017, but the market is struggling to absorb the expensive dairy.

Processing plants accumulated high stocks of butter and milk powders by the end of Russias «high milk season» in September 2017. Butter and milk powder stocks are anticipated to remain high in the beginning of 2018, which will soften demand from processing plants. If consumer purchasing power improves as anticipated in the macroeconomic forecasts, the milk market in Russia will stabilize in the second half of 2018, when recovered consumption will balance with available supply from local plants and imports. The recovery will not quite make up for the high butter and powder stocks in the first half of 2018, and so Post forecasts a small annual decline in production of fluid milk, butter, and SMP. The production of WMP is anticipated to increase at the expense of imports, the production of cheese is forecasted to increase one percent because of anticipated recovery of demand for semi-hard and specialty cheeses.

Agro Perspectiva

< World coffee production for 2017/18 is forecast 600,000 bags lower than the previous year to 159.9 million bags All news for
Dynamo 11th within ranking of best European clubs of all time >

17:10 Economy Ministry announces market agreement to limit corn export from Ukraine in 2020/2021 MY to 24 mln tonnes
13:33 China Lowers Applied MFN Tariff Rates and Revises Out of Quota TRQ Rates
11:28 Ukraine plans to return to sending IMF borrowing into NBU FX reserves by 2023 Finance minister
09:15 Honey exports from Ukraine increase in monetary terms by 27.2% in 2020
21:25 Agricultural production in Ukraine falls by 11.5% in 2020 statistics
21:17 Ukraine increases imports of chocolate by 25.7%, coffee by 15.4% in 2020
17:25 China Demand and Global Supply Concerns Drive U.S. Soybean Price Higher
16:30 China Meat Consumption Expected to Rebound in 2021
10:50 Despite Grain Export Restrictions, Russia to Reclaim Top Wheat Export Position
16:37 2020 in review: Focus on staff well-being drives FAO forward
15:36 Sustainabilitys influence on chocolate purchase decisions continues to grow, Cargill study finds
13:35 Malaysia. Palm oil (CPO) production forecast - 19.6 million MT
15:09 Serbias total area wheat crop is estimated at 600,000 ha
14:10 India. Winter temperatures this coming December through February, along with precipitation will be critical
17:15 Make #NotWasting food a personal resolution
16:15 Two cases of HPAI on duck farms in France threatening the foie gras industry
21:25 Philip Morris files suit against Ukraine in intl investment arbitration due to AMCU penalty
21:00 FAO moves to scale up response to Fall Armyworm as pest continues to spread
17:15 Global Environment Facility approves over $78 million to support FAO-led projects
16:38 Desert Locust upsurge continues to threaten food security in Horn of Africa and Yemen despite intense efforts
15:55 India Tariff Cut Boosts Palm Oil Imports
13:31 Global Wheat Prices Supported by Record Global Imports
13:00 Jose Carlos Corral Montilla appointed to Managing Director of BTC Europe
12:10 Chile. Avocado exports will reach 145,000 MT, assuming planted area and productivity remain unchanged
15:30 Cargill, IFPEN and Axens collaborate to advance lactic-to-acrylic-acid technology
14:15 World 2020 cereal production forecast reduced further
13:50 FAO Food Price Index rises sharply
13:25 EBRD supports Ukrainian pet food producer Kormotech
16:10 Thailand: Rice export prices increased 1-3 percent
16:05 FAO and partners advocate for inclusive food systems to combat rural poverty
14:05 Draft state budget for 2021 submitted to Rada for consideration at second reading
15:10 Belgian Regains African Swine Fever-Free Status
01:20 HPAI Detected in Commercial Turkey Flock in Sweden
13:50 Poland has been the EUs largest turkey meat producer since 2017
12:01 Global 2020/21 Sugar Production is Estimated Higher United States, India, and Brazil Up 10 to 40 Percent
10:50 HPAI Detected in Commercial Flock in Denmark
17:10 FAO urges G20 to support farmers, protect the vulnerable and invest in innovation
17:00 Decline of Ukraine's GDP slows to 3.5% in Q3, 2020 statistics
16:35 Bulgarian grain trading has been slower than the previous season
12:21 Bosch and BASF establish joint venture for digital technologies in the agricultural sector
08:50 Lower Sunflower Seed Production in Ukraine and Russia Tightens Global Oilseed Supplies
17:00 Global almond production for 2020/21 is forecast 15 percent higher to 1.7 MMT
10:48 Despite a cut in world cereal production, this years forecast output remains an all-time high
14:50 Global food prices continue rising in October
12:15 BASF and TECNALIA accelerate R&D of new crop protection products through digitalization
17:00 Scrapie Identified in Sheep in Iceland
16:35 National budget receipts target met by 109.8% in Oct Treasury
17:00 European Bank for Reconstruction and Development and FAO approve COVID-19 technical support package
16:45 2020 EU milk deliveries will grow by one percent
16:41 Pork. Global productionisforecast 4 percent higher in 2021 due to rebounding output in countries affected by ASF

Also available: 

Agrarian Week in digital


NewsNews - News - News - News - News - News
BriefWeekly Reports - Free article
SubscriptionTariff - News&Reports
AdvertisingMagazine - Site
ConferencesForum AGRO-2013 - DAIRY WORLD-2008 - FERTILIZERS-2010
For our clientsAgroNewsDaily - Ukrainian Grain&Oilseed Market - Fertilizers - Milk Monthly - Milk Weekly
About usAbout project - Contact
2002 -2021 © Agrarika, ltd.
tel.: +380 44 4868119; +380 44 5934540
e-mail: client@agroperspectiva.com