Regional milk producers are in favor of strict self-isolation and are preparing to decrease in prices
In Europe, especially in countries severely affected by COVID-19, social tensions are rising. In the United States, unemployment is forecast to increase by about 50% in the next six months, and dairy alliances are asking the authorities to start purchasing dairy products for food banks.
As a result of reduced demand, there are more cases when farmers in the United States drain milk, not hoping to get money for it. According to the media, increasing social tension is also observed in Italy. Mayor of Palermo Leoluca Orlando told reporters that the risk of mass riots in southern Italy is very high, because the discontent of citizens is going to be used by criminal structures that seek to "destabilize the system". "The more time passes, the fewer resources are left. People's few savings are running out. Soon there will be socio-economic difficulties", believes Orlando.
Giuseppe Provenzano, Italy's Minister for the southern regions, also noted the increasing social tensions and the possibility of civil disorders in the poor regions of the country. "I am afraid that the concern of a large part of the population about health, income and the future will soon turn into anger and hatred", he said in an interview to the newspaper La Repubblica.
In Russia, meanwhile, the rise in food prices worries citizens more than the coronavirus. The situation is that the vast majority of Russians went on a forced "vacation" without the savings, and the simple small business and number of sectors are giving jobs to hundreds of thousands of people entail risks of bankruptcies and the fact that many citizens will be left without means of livelihood and will be forced to choose what to buy - cheese or chicken.
In our country, prices for raw milk are still relatively stable, but a number of farms in an interview with The DairyNews reported that they have already been forced to reduce the price themselves or expect offers to reduce it from milk processors in the future.
On April 6, 2020 Dairy Index DIA amounted to 27.59 rubles/kg (excluding VAT, fat-3.6%, protein-3.0%), 0.1% lower than last week and 6.7% higher than at the beginning of April 2019. The key factor in the decline in the index was the drop in import prices due to a decrease in prices for exchange-traded dairy products, while prices for raw milk in Russian regions continued to rise, according to the Index DIA application. According to analysts of the Dairy Intelligence Agency (DIA), the weighted average price of milk in Russia last week increased by 0.08% to 25.81 rubles/kg, which is 5.4% higher than the price of the beginning of April 2019. Prices for raw milk increased in Moscow region, the Republic of Tatarstan and in Krasnodar region. The decline in prices for raw milk was observed in Omsk and Samara regions.
Regional milk producers noted in an interview with The DairyNews the serious attitude of local municipalities that are ready to support enterprises. Many of them stressed that they see two problems in the near term: first, the risks of losing labor due to self-isolation and quarantine. Secondly, some factories focused on the production of milk for social organizations today have lost sales markets and have not had time to reorganize.
In the US, the situation is more complicated, as the "School milk" program and regional programs to support dairy producers are actively developing in the United States - not only drinking and flavored milk, but also cheeses are supplied to schools. In a number of regions of the Russian Federation, individual sites also faced a decrease in demand in the social sphere due to the closure of schools and kindergartens, and the transfer of children to distance learning.
Sergey Ovodkov, representative of JSC “Kalininskoe” (Tver region), noted that today the company processes 14 tons of milk at its own facilities and delivers about 26 tons to two plants - "Umalat" and "Campina".
- We have a decline of about 7% in our own processing, which is a small indicator for us. Factories consistently receive milk; we do not experience any great difficulties. In addition, the delivery of packaging and components is uninterrupted for our own shop. In different regions, factories note a drop in sales of perishable categories. Some sites were not in demand for products for the HoReCa sector, - says Sergey Ovodkov.
Many producers are afraid that if large volumes of milk powder are imported from the Republic of Belarus, the price of raw milk inside the Russian Federation will fall rapidly.
Elena Stafeeva, Director of the agricultural complex “Plamya” in Sverdlovsk region, emphasizes that "agriculture will remain operational, because there is a demand for products".
- In our country, traditional consumption prevails and so far the demand is all right. There may be problems with non-demand for milk, but not on the same scale as in foreign countries. Milk is traditionally consumed in large quantities in households and is necessary for children. We are watching to see how the situation is developing and react promptly, - said Elena Stafeeva.
Large milk producers with far-reaching investment plans are also in a difficult situation. Planned and started investment projects are either frozen or suspended today, and many equipment deliveries are being negotiated due to changes in the exchange rate.
Nikolay Plaskunov, Deputy General Director of "Vakinskoe Agro", said that no one has warned the farm about a decrease in purchase prices yet, in addition, the company's own plant does not record a decrease in volumes. The expert is sure that large volumes of high-quality milk are in demand today.
The problem for the regions in the Central Federal district remains the invasion of "summer residents" who do not always follow the instructions of the authorities on self – isolation - we remind that today many regions still require a two-week quarantine for people who arrived from Moscow and St. Petersburg.
"In the current situation, there may be a wave of small business collapse. People will be looking for work. We are ready to provide it. But such people need to be taught, and this takes time. We worry about our specialists, take care of them, and provide maximum control over the state of production. We advocate self-isolation and careful monitoring. We have a very strict position of municipalities - those who came from Moscow - everybody is under control", - said Nikolai Plaskunov, reporting that the company is actively increasing milk production and studying all possibilities to maintain the efficiency of the farm in the conditions of further growth in prices for the imported components.
Today, “Rusprodsoyuz” reported an increase in prices for various food products up to 20%. X5 stressed that the increase in prices for socially important categories is insignificant.
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