Declining consumption of dairy products and changes in the structure of the former result in shifts in the structure of imports and exports as well. The market is still recovering after the crisis and imposed sanctions. At the same time, imports and exports of dairy goods have been on the decline. Partially the deficit is covered by domestic production; supplies of virtually all types of dairy products from Belarus have been dropping, said country being the main dairy exporter into Russia – supplies of Russian goods to countries of the CIS are on the decrease as well. According to the Russian Federal State Statistics Service (Rosstat), during the first half of 2018, milk output (excluding raw milk) in Russia increased by 0.6% to the first half of 2017; production of butter declined by 1.5%; and cheese production grew by 3%. At the same time, even against the decline, volumes of imports exceed exports manifold in monetary terms. However, it is only by the end of 2018 that one will be able to make more definite conclusions.
In 2016–2017, exports were gradually recovering after a significant drop in 2015 which concerned all types of dairy goods except milk and cream. This was happening under the influence of sanctions and import substitution, when the ban on exports was compensated for by growing domestic output. In January–May 2018, exports fell across all dairy product categories as a result of decreased supplies to the key importing countries.
Stable growth in the structural share of exports in value terms has been demonstrated by cheeses, quark, milk and cream through declining shares in whey, milk and condensed cream. Compared with 2017, in January–May 2018 the structural share of yogurts increased by 1.5 pp. despite the drop in yogurt export volumes – supplies of yogurt from the Russian Federation in physical terms dropped from 28.2 thousand tonnes in January–May 2017 to 21.6 thousand tonnes in the similar period of 2018. This is largely due to changes in the structure of the dairy market as a whole under the influence of shifting consumer preferences.
In January–May 2018, the bulk of exports in monetary terms in the category of non-condensed milk and cream (69.5%) fell on goods with the fat content of more than 1% but less than 6% (75.9% in 2017) as well as products with the fat content of more than 10% (19% against 13.8% in 2017). The following countries were the largest importers of Russian non-condensed milk and cream: Ukraine (48.8% against 45.5% in 2017), Kazakhstan (29.6% against 31.7% in 2017), Abkhazia (5.6% against 6.6% in 2017), and Kyrgyzstan (5.6% against 1.9% in 2017). Belarus had its share reduced from 6.7% in 2017 to 3.5% in January–May 2018.
The structure of condensed cream and milk exports in January–May 2018 was as follows:
* condensed milk and cream with the fat content of up to 1.5% – 9.6% (12.8% in 2017);
* condensed milk and cream with the fat content of more than 1.5% – 7.6% (6.8% in 2017);
* other milk and cream varieties with the fat content of more than 1.5% – 0.8% (0.5% in 2017);
* condensed milk and cream without added sugar with different fat content – 7.5% (23.3% in 2017);
* other condensed milk and cream with added sugar – 74.5% (56.6% in 2017).
Russia was mainly supplying condensed milk and cream to Kazakhstan (60%; 66.8% in 2017), Ukraine (13.3%; 13.4% in 2017), and Belarus (8.2%; 6% in 2017).
Within the category of yogurt, kefir and other fermented goods, exports were distributed as follows: yogurts – 20.9% (20.5% in 2017); other dairy goods, flavored and non-flavored, with and without added sugar, with and without added fruit, nuts or cocoa – 79.1% (20.5% in 2017). The main countries importing Russian goods within the aforementioned category are Kazakhstan (30.8% against 33.7% in 2017); Belarus (13.2% against 15.5% in 2017); Azerbaijan (10.7% against 8.2% in 2017), and Ukraine (9.6% against 8.7% in 2017).
In the category of whey, the bulk of supplies fell on condensed and non-condensed whey with and without added sugar (53.4%; 65.7% in 2017). The share of exports of other dairy goods with and without sugar or other sweeteners amounted to 46.6% (34.3% in 2017). The Russian Federation mainly supplied whey to Belarus (38%; 10.1% in 2017); Kazakhstan (28.9%; 45.5% in 2017), and Ukraine (17%; 33.3% in 2017).
In the category of butter in January–May 2018, the largest export volumes fell on natural butter (81.6%; 78% in 2017), whereas dairy spreads and other diary fats occupied 15% (14.1% in 2017) and 7% (4.3% in 2017) of supplies respectively. The main importers within the category include Kazakhstan (41.2% against 49.2% in 2017), and Ukraine (38.7% against 37.1% in 2017).
In the ‘cheese and quark’ category, the largest shares of exports fell on non-grated and non-powdered processed cheeses (42.6%; 42,9% in 2017), and on fresh (green and unripened) cheeses and quark (43.7%; 39.1% in 2017). The leaders in supplies of said products were Kazakhstan (45.4%; 49.2% in 2017); Belarus (18.3%; 15.2% in 2017), and Ukraine (15.1%; 12.5% in 2017).
All in all, one can conclude that the structure of Russian dairy exports is fairly stable and is not undergoing any serious shifts in terms of both product ranges and importing countries. A drop in exports to the similar period of 2017 occurred across all countries mentioned above. However, clearer conclusions regarding the situation can only be made by the end of 2018.
Imports decreased across all dairy good categories with the exception of yogurt, kefir and other fermented products, which, as has been indicated above, was due to changes in consumer preferences in the dairy market (demand shifting towards modern and functional dairy goods).
During the time period analyzed, cheeses had their share increased in the structure of imports (demand has been gradually recovering, although according to a large number of consumers, the market currently offers no decent substitutes of imported cheeses), which led to a decrease in the shares of other product varieties except yogurts.
A comparison of export and import structures reveals that Russia’s strongest positions in exports fall on yogurts, kefir and other dairy goods, as well as cheese and quark, whereas the largest volumes of imports are accounted for by cheese and quark; butter; and condensed milk and cream.
Having analyzed imports in monetary terms, one can make the following conclusions. In the ‘non-condensed milk and cream’ category, in January–May 2018, the bulk of supplies in value terms fell on milk and cream with the fat content of more than 1% but less than 6% (70.2%; 57.7% in 2017) and with the fat content of more than 10% (28.1%; 38.8% in 2017). Belarus served as the largest supplier of these products, having accounted for the share of 91.8% in imports (93.3% in 2017). Imports from Belarus fell by 15% compared with the similar period of 2017.
The bulk of condensed milk and cream imports fell on products with the fat content of up to 1.5% (51.5% against 54.3% in 2017), whereas the share of goods with the fat content of more than 1.5% equaled 27.1% (29.6% in 2017). The main countries exporting condensed milk and cream are Belarus (86.1% against 73.4% in 2017), and Uruguay (3.5% against 7.4% in 2017). Imports from Belarus dropped by 43% in monetary terms.
Within the category of yogurt, kefir and other fermented goods, in January–May 2018, yogurts occupied 18.1% of imports (14.4% in 2017). Other dairy goods, flavored and non-flavored, with and without added sugar, with and without added fruit, nuts or cocoa accounted for 81.9% of imports (85.6% in 2017). Belarus was the largest exporter in the category (95.9%; 95.9% in 2017), its supplies in monetary terms having increased by 19%.
In the category of whey, the bulk of supplies fell on condensed and non-condensed whey with and without added sugar (86%; 86.6% in 2017). Other dairy goods with and without sugar or other sweeteners occupied 14% in imports (13.4% in 2017). The largest volumes of whey supplied to Russia were imported from Belarus (66.7% against 75.9% in 2017), and Argentina (25.5% against 13% in 2017). Supplies from Belarus plummeted in half to the similar period of 2017.
In the category of butter, the main volume of imports fell on natural butter (88.3%; 89.9% in 2017). Dairy spreads amounted to 3% of supplies (1.7% in 2017), whereas other dairy fat varieties had the share of 8.7% (8.3% in 2017). The leading suppliers of goods within the category were Belarus (71.5% against 72.2% in 2017), and New Zealand (13.8% against 18% in 2017). Supplies from Belarus declined by 45%, whereas supplies from New Zealand dropped by 73%.
In the ‘cheese and quark’ category, the largest shares belonged to fresh (green and unripened) cheeses and quark (24% against 15.9% in 2017), and other cheeses (73.6% against 42.9% in 2017). Other shares are occupied by grated and powdered cheeses of all varieties, non-grated and non-powdered processed cheeses, as well as blue and other cheeses produced with the use of penicillium roqueforti. Said products were mainly exported from Belarus (79.3%; 82.7% in 2017); Argentina (6.9%; 4.7% in 2017), and Serbia (4.7%; 3.6% in 2017). Compared with January–May 2017, supplies from Belarus demonstrated a 10% decrease, whereas supplies from Argentina and Serbia grew by 34 and 44% respectively.
The bulk of dairy exports from Russia are supplied to countries of the former Soviet Union, whereas imports are mainly supplied from Belarus (its share has been on the decline, however). Other countries have small shares in the structure due to various sanctions and restrictions.
An analysis of consumer prices for the period from July 2017 to July 2018 indicates growth within 2–5% in the following categories: whole pasteurized drinking milk with the fat content of 2.5–3.2%; whole sterilized drinking milk with the fat content of 2.5–3.2%; condensed milk with added sugar; sour cream; processed cheeses; soft and hard rennet cheeses; fat quark; low-fat quark.
Consumer prices reflect the state of things in average producer prices, which have increased within similar ranges over the past 12 months and declined by 1.5 and 21.9% in pasteurized milk and hard cheeses respectively.
This is largely due to a decrease in average prices of cow’s milk producers – during the period from July 2017 to June 2018, they declined by 7.4% (from 23,349.37 to 21,630.94 rubles per tonne).
In summing up the interim indicators for the first months of 2018, one can state that the Russian dairy market is rather stable despite declining exports and imports. The changes taking place primarily concern consumer behavior, which affects domestic production and foreign trade of dairy goods.
Candidate of Economic Sciences, member of the Russian Marketers’ Guild
Founder Research Company “Laboratoriya Trendov”