Milk processors in Karelia will discuss changes in the terms of supply of raw materials - Vladimir Labinov

In October republican milk producers announced the need to revise purchase prices due to the rise in the cost of feed and fuel, after which, having received a refusal from processing partners, they began selling raw materials to Vologda region. As a result, Slavmo and ODP, which represent two of the four largest dairy processing enterprises in the region, announced the threat of staff cuts and the risks of production disruptions.

‘We asked that the format of the negotiations be not long in time. Depending on how quickly the parties come to an agreement on price positions, to what extent our proposal to adjust the agreement is accepted, we will hold another meeting, during which we will come to a more concrete understanding of the issue,’ said the Minister of the Karelian Ministry of Agriculture after closed negotiations with the parties to the conflict.

According to Labinov, who also holds the position of Chairman of the board of directors of the state farms Megregi and Ilyinskoe, in their proposal, milk producers have set new conditions for the formation of purchase prices, in particular due to the possibility of adjusting for inflation and allocating a separate grade of Ilyinskoe milk of superior quality. Its processors will be offered to buy this milk at 40 rubles per liter.

‘The cost price, taking into account the growth [of prices] of concentrated feed, commodity material values, provided that wages at the enterprise have not increased for two years, is approximately 38 rubles. Now we sell milk at 36.4 rubles,’ said Antonina Zherebtsova, General director of the breeding farm Ilyinskoe.

According to Anatoly Buldakov, Executive Director of JSC Slavmo, the company is now working with Ilyinskoe, having agreed on a price of 37.48 rubles per liter. At the same time, the company completely stopped supplying raw materials from Megregi, which accounts for a 30 percent share of all processing. At ODP, as a result of a reduction in milk supplies from Ilyinskoe, the volume of processing decreased by about 100 tons - up to 180 tons of milk.

‘We must fulfill our obligations under municipal contracts - to provide dairy products to kindergartens in Karelia. <...> We are doing this work now, it is not being disrupted. The second point, taking into account the fact that we have contractual relations with federal [retail] chains, we send our products to federal retail chains in order to reduce the possible negative effect of non-fulfillment of applications,’ answered the representative of Slavmo when asked the question whether the current crisis will affect consumers.

JSC Slavmo and Olonetsky dairy plant are one of the largest processors in the republic. In total, according to the regional Ministry of Agriculture, local producers account for up to 40% of the regional dairy market.