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1/2018


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TEA & COFFEE
Review of the Russian Coffee Market
Research by the Company NeoAnalytics

CONFECTIONERY
Review of the Russian Chocolate Market
Research by the Confectionery Market Research Center

MEAT
Review of the Russian Mutton Market
Research by the Company Global Reach Consulting

Branding of Halal Products in the Poultry Market
Research by the Branding Company Labelmen

DAIRY PRODUCTS
Review of the Russian Market of Milk
Research by the Information-Analytical Company VVS

Review of the Russian Cheese Market
Research by the Company Step by Step

FAST FOOD
Review of the Russian Market of Cereal Bars
Research by the Company IndexBox

BABY FOOD
Review of the Russian Baby Food Market
Study by the Company RBC Market Research

INGREDIENTS
Review of the Russian Malt Market
Study by the Company ID-Marketing

FRUIT & VEGETABlES
Review of the Russian Fruit and Vegetable Market
Research by the Company I-Marketing

FOODSERVICE
Key Consumer Trends of the Public Catering Industry
Research by the Company NPD

HEALTHY NUTRITION
Review of the Russian Market of Healthy Foods
Research by Consulting Company Foresight 24



Review of the Russian Market of Milk

Research by the Information-Analytical Company VVS
The press regularly publishes materials dedicated to questions of food security, namely the countrys self-sufficiency in the main food products, including milk. According to the doctrine, Russia is supposed to be 90% self-sufficient in terms of milk, and yet production of milk in Russia has been declining slowly and steadily, having decreased by 3.8% over the past 10 years. Whereas in 2007, 31,988.4 million litres of raw milk were produced, in 2016 output amounted to 30,758.5 million litres. Slight growth was observed in the period from 2007 to 2009, when production was growing by approximately 1% annually, but afterwards a crisis occurred. Occasional peaks were recorded in 2012, +0.35% to the level of the previous year, and in 2014 +0.86%. According to preliminary data, production volumes in 2017 amounted to 30,785 million litres.
The main reason for the problem with milk the Russian Federation is facing is the reduction of production thereof in various subsidiary plots. Feeds have been increasingly expensive, and it has been more and more difficult to keep a cow. In addition, rural population has been declining due to migration of young people to cities and deaths of the pensioners who stayed. In recent years, milk output volumes in household plots dropped by 21.7% from 16,541.8 million litres in 2007 to 12,950.5 million litres in 2017.
The situation is noticeably better in farms. Production of milk at farms has grown by 71% during the past 10 years from 1,283.7 million litres to 2,194.8 million litres. According to preliminary data of the previous year, milk production volumes in farms amounted to 2,323.3 million litres. It does not make a big difference, however, as the share of farms makes up only 7.6% of the total volume of Russian production.
Half of domestic milk today is yielded in large agricultural enterprises with the average dairy cattle number of at least a thousand. In recent years, this segment has been demonstrating steady growth dynamics at 2.5% per year. During the 10 years from 2007 to 2016, production of milk in agricultural enterprises has grown by 6.3% from 14,162.9 million litres to 15,061.1 million litres; according to preliminary data for 2017, there was an additional increase by 3% to 15,511.3 million litres.
How much milk does Russias average dairy cow produce? In the USSR, the governing party set a task for collective farms to strive for the level of 10 thousand litres per cow, since this was the amount yielded from every cow on average by foremost manufacturers in the bourgeois West. Unfortunately, during the 26 years of capitalism, Russian agriculture has not reached such advanced levels and only got slightly closer to them.
Over the 10 years, dairy cattle population in Russia declined by 20%, from 9,139 thousand in 2007 to 7,308 thousand in 2016. At the same time, as has been stated above, milk output only decreased by 3.8%. This implies that during the 10 years, productivity of dairy cattle farming has increased by 20.2%, reaching 4,209 litres per cow per year in 2016. According to preliminary optimistic data of the previous year, the number of dairy cattle in the Russian Federation declined by 4.3% to the level of 6,993 thousand. Since production volumes last year did not decline and even increased slightly, productivity of the average dairy cow grew by 4.6%, amounting to 4,402 litres by the end of the year.
The lowest dairy herd productivity can be observed in private subsidiary plots, as strange as it may seem at first. However, if one remembers the dying villages, it becomes obvious. Milk yield is virtually unchanged there 3,500 litres per cow on average. Since the cattle population has been declining (from 4,897 thousand to 3,655 thousand during the past 11 years), production volumes have been dropping along with it.
Farms have been demonstrating positive dynamics, however. First and foremost, farms are the only segment where the dairy cattle population is growing. During the past 10 years, the dairy cattle number increased by 32.6% from 473 thousand in 2007 to 627 thousand in 2016. In the past year, according to preliminary data, growth equalled additional 2 thousand cows. Milk output growth rates surpass growth rates of the livestock number. Productivity has been increasing accordingly. According to preliminary data for 2017, average dairy herd productivity in farms equals 3,695 litres per year.
The situation is less unambiguous in agricultural organisations. Firstly, the total dairy cattle number in them has decreased even more than in household plots over the 10 years by 25.6%, from 3,769 thousand to 2,805 thousand, and by 3.4% in 2017, to 2,709 thousand. Secondly, milk yield has increased from 3,758 litres per dairy cow in 2007 to 5,370 litres in 2016. According to preliminary data for 2017, average yields in agricultural organisations amounted to 5,726 litres per cow. This is higher than the average in Belarus, for instance. As milk yield has been growing at a faster rate than the dairy herd, production of milk in agricultural organisations has increased as well. Therefore this is a case of production intensification, which was talked about so much in the USSR.
As strange as it may sound, the highest yields are demonstrated by Moscow or rather, areas within its administrative borders, where a number of relatively advanced animal farms are located. The number of dairy cattle in Moscow is rather small only 3,378 cows, but the milk yield in the region amounts to 8,469 litres per year, which is higher than in the European Union, but lower than in the USA. Leningrad region is second in terms of productivity, demonstrating milk yield levels of 8,184 litres per cow per year. Kaliningrad region is third with the level of 7,156 litres per year.
All in all, the top 10 regions in milk output volumes (in descending order) are as follows: Tatarstan, Krasnodar Krai, Udmurtia, Leningrad region, Moscow region, Kirov region, Voronezh region, Altai Krai, Sverdlovsk and Novosibirsk regions. In 2016, these regions accounted for more than 43% of the total raw milk production in the Russian Federation.
Nevertheless, despite the impressive productivity growth rates, Russia is not self-sufficient in terms of milk. In 2016, almost 724 thousand tons of milk and fermented dairy products in powdered, condensed and liquid forms were imported into the country, along with 222 thousand tons of cheese and quark as well as 105.7 thousand tons of butter and other dairy fats. In terms of raw milk, this amounted to around 8,200 million litres, or 21% of the total production volume. At the same time, 10,500 million litres in 2016 were used for calf feeding, sales to the population and home production of fermented dairy. The remaining 20,200 million litres, the so-called marketable milk, were passed to dairy plants for processing. The shares of marketable milk are 94.3% in agricultural organisations, 68.3% in farms and only 33.3% in subsidiary plots. At the same time, milk marketability indicators in agricultural organisations and farms have been increasing in recent years, whereas indicators in household plots have been declining. According to preliminary data for 2017, 20,714 million litres of marketable milk were produced in Russia. 70.8% thereof fell on agricultural organisations, whereas the shares of farms and household plots equalled 7.6 and 21.6% respectively. Speaking of imports of milk and fermented dairy goods in powdered, condensed and liquid forms, they exceeded 800 thousand tons, imports of cheeses and quark amounted to more than 215 thousand tons, whereas imports of butter and other types of dairy fats exceeded 115 thousand tons. In terms of raw milk, this is higher than the indicator of 2016. It turns out that over the year, Russias food security has declined by 1.7%.

Vadim Pashin,
Expert
Information-Analytical Company VVS




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