Price rock-n-roll
Источник: The DairyNews
For the first time for a long time, prices for raw milk in Russia began to decline. However, according to analysts, it is insignificant explaining the current price disparity with the world level, lagging behind due to technological development dairy industries of the Russian Federation and the lack of raw milk in the Central part of the country, where there is a maximum number of processing sites.
In late March, the Ministry of agriculture and food of Belarus on the background of changes in the dynamics of global and Russian markets has reduced the minimum recommended export prices for dairy products. The last auction of the New Zealand exchange Global Dairy Trade showed an increase of the index by 1.7%, mainly due to the growth of prices for whole milk powder and butter, however, skimmed milk powder has once again demonstrated the decrease, and cheddar fell in price as well. In addition, the average price of dairy products in the course of trading fell by more than 13%. According to the Russian Dairy Research Center Dairy Index RDRC at the end of March was slightly lower compared to last week, 0.04%, due to lower prices for dairy products on the global stock exchanges. Dairy Index RDRC on March 27, 2017 amounted to 26.97 rubles per kg (excluding VAT, with fat and protein content 3.6% and 3.0% respectively). Meanwhile the indicator remains at a fairly high level in comparison with world prices.
Dairy farming which is attractive for investors in Russia requires investments constantly, in connection with the policy of import substitution and the aim of the authorities of the state to reach self-sufficiency in milk. Long term return on investment doesn’t play the only significant role in achieving this goal.
"As soon as the investment of proper level will be directed to agroindustrial complex, both state and private, and there is worthy management that is capable to use these investments properly, we need to count 10 years and get the required timing," says Artem Bagreev, Director of LLC "Deverenskoe molochko".
According to experts interviewed by The DairyNews, the majority of large dairy complexes in Russia are close to zero profitability.
"The root of success lies in managerial skills. Now there are more inefficient enterprises than effective ones, because there is incompetence, nature laziness, and various other reasons why enterprises prefer to stay at medium or lower level. Another thing is that the potential for improving efficiency is always there. One only needs good motivation, desire and ability", - said Artem Bagreev.
"By our assessment, most of the milk producers, despite the positive in general macroeconomic situation for the industry - double devaluation of the ruble, counter-sanctions against most of major competitors in the dairy market - are in the situation of "zero economic profit". As it is noted by one of the practitioners on this site, "the situation is like a stretched string", - said Vladimir Surovtsev, Ph. D., Head of Department of economic and organizational problems of development of branches of agriculture, associate Professor of Federal state budgetary scientific institution "North-West research Institute of Economics and organization of agriculture".
According to Vladimir Surovtsev, the Russian Ministry of agriculture has failed to form effective mechanisms of state support and regulation of the dairy industry to preserve the stability of technological development of dairy farming.
"Forms of support for the sector do not meet the industry specifics in the majority of regions of Russia. In contrast to poultry and pig industry the support doesn’t ensure the sustainable development of the majority of producers and milk processors that form the basis of the dairy industry", - says the expert in an interview with The DairyNews.
The price of milk, say market participants, is definitely high, higher than the global average and the European level of price. According to the Federal state budgetary institution "Special centralized recording in agriculture", the current level of price for raw milk for producers in Russia exceeds the same period last year more than by 11%.
Meanwhile it became known that the Dutch FrieslandCampina keeps the price for milk in April at the level of March, and the cooperative ArlaFoods in England reduces the price by 0.42 pence. In general, the world leaders of the dairy market repeatedly since the beginning of the year announced the formed era of volatility of the industry. "Volatility is here to stay", - said the representatives of Fonterra. The Russian market lives with this definition while in conditions of high prices of raw milk, changing requirements of state support and pressure of the world markets, starting from nearest neighbors to New Zealand.
Read full article in Russian on DairyNews.ru
Dairy farming which is attractive for investors in Russia requires investments constantly, in connection with the policy of import substitution and the aim of the authorities of the state to reach self-sufficiency in milk. Long term return on investment doesn’t play the only significant role in achieving this goal.
"As soon as the investment of proper level will be directed to agroindustrial complex, both state and private, and there is worthy management that is capable to use these investments properly, we need to count 10 years and get the required timing," says Artem Bagreev, Director of LLC "Deverenskoe molochko".
According to experts interviewed by The DairyNews, the majority of large dairy complexes in Russia are close to zero profitability.
"The root of success lies in managerial skills. Now there are more inefficient enterprises than effective ones, because there is incompetence, nature laziness, and various other reasons why enterprises prefer to stay at medium or lower level. Another thing is that the potential for improving efficiency is always there. One only needs good motivation, desire and ability", - said Artem Bagreev.
"By our assessment, most of the milk producers, despite the positive in general macroeconomic situation for the industry - double devaluation of the ruble, counter-sanctions against most of major competitors in the dairy market - are in the situation of "zero economic profit". As it is noted by one of the practitioners on this site, "the situation is like a stretched string", - said Vladimir Surovtsev, Ph. D., Head of Department of economic and organizational problems of development of branches of agriculture, associate Professor of Federal state budgetary scientific institution "North-West research Institute of Economics and organization of agriculture".
According to Vladimir Surovtsev, the Russian Ministry of agriculture has failed to form effective mechanisms of state support and regulation of the dairy industry to preserve the stability of technological development of dairy farming.
"Forms of support for the sector do not meet the industry specifics in the majority of regions of Russia. In contrast to poultry and pig industry the support doesn’t ensure the sustainable development of the majority of producers and milk processors that form the basis of the dairy industry", - says the expert in an interview with The DairyNews.
The price of milk, say market participants, is definitely high, higher than the global average and the European level of price. According to the Federal state budgetary institution "Special centralized recording in agriculture", the current level of price for raw milk for producers in Russia exceeds the same period last year more than by 11%.
Meanwhile it became known that the Dutch FrieslandCampina keeps the price for milk in April at the level of March, and the cooperative ArlaFoods in England reduces the price by 0.42 pence. In general, the world leaders of the dairy market repeatedly since the beginning of the year announced the formed era of volatility of the industry. "Volatility is here to stay", - said the representatives of Fonterra. The Russian market lives with this definition while in conditions of high prices of raw milk, changing requirements of state support and pressure of the world markets, starting from nearest neighbors to New Zealand.
Read full article in Russian on DairyNews.ru
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