Despite its relative isolation, the Russian dairy market is
rising in sympathy with European prices, said Stephan Duerr, the president of
Milk prices have seen a precipitous rise in recent months,
thanks to a global slowdown in production.
Data from the European Commission estimates EU milk prices
32.03 euro cents per kilogramme in December.
This is up 5.1% year-on-year, and up 24.7% from the market's
Shortage of supply
Mr Duerr forecast that in the next couple of months the
price of milk per litre in will rise to 40 euro cents.
"The primary reason for this dramatic increase in prices is
the drop in milk production volume," said Mr Duerr, with European production
down some 10%.
"Western milk producers spend approximately 30- 35 euro cents
to produce 1 litre of milk… considering the investments, the production costs
even reach 40 eurocents," he said.
"When the milk prices stayed at the level of 20-25 eurocents
per litre for a long time, many family farmers simply gave up their business."
"Why keep on making losses? "
rallies in sympathy
Given the sanctions on EU exports of dairy products into
Russia, prices there might appear insulated from the European market.
But producers are raising prices there as well, Mr Duerr
"Our processors do not quite understand what is going on but
they are also increasing the prices."
And Mr Duerr warned that given the tightness in Europe,
sanctions are not the only things keeping European supply out of Russia.
"My acquaintances in the German milk processing industry
tell me that if the Russian government removed the dairy product import ban
tomorrow, they would not be able to supply cheese to Russia because they simply
do not have enough of it," Mr Duerr said.
Mr Duerr returned to the subject of adulteration of Russian
dairy products, an issue he has raised in the past.
"In order to keep the prices stable, many processors will
use vegetable fat for dairy production," he said.
But the rise in prices still offer an opportunity for
"Next year, EkoNiva will continue increasing milk production
volumes," Mr Duerr said.
"Provided that we receive the subsidies and the conditions
for production are favourable, we will consider a possibility of construction
of further dairy facilities.