Belarus to suspend powdered milk supplies to Russia from Q2
MINSK. March 6 (Interfax) - Belarus will suspend supplies of powdered milk to Russia from the start of the second quarter and has undertaken not to lower recommended base prices for dairy products on the Russian market, the Belarusian Agriculture and Food Ministry told Interfax.
"We understand that to build a common, stable dairy market within the Customs Union it is necessary to reach agreement with all country members and take into account their features and needs. We have held various consultations between our ministries and have made various decisions," the ministry's press service cited Agriculture Minister Mikhail Rusiy as saying.
Belarus has pledged not to lower the recommended base price on dairy products for the Russian market before the end of 2012.
Supplies of powdered while milk and whey powder from Belarus to Russia will be suspended and resumed by mutual consent of the two countries, the ministry said.
Every two weeks the countries will approve recommended base prices for the Russian market and present the results of monitoring supply and demand for milk and dairy products in 2012 and the compliance with recommended base prices. Where necessary steps will be taken for other products, especially butter.
The Belarusian ministry said Russia will submit proposals to the Eurasian Economic Commission for tariff protection on different types of dairy products. The Russian National Milk Producers Union raised the issue that dairy product prices recommended by the Belarusian Agriculture Ministry for the Russian market were damaging for milk producers in Russia. The recommended wholesale price for butter (72.5% fat) for delivery to Russia is 108.5 rubles per kilogram, the price for powdered milk - 144 rubles and for whey powder - 41.8 rubles per kilogram (with VAT).
For Russian producers, with average prices on raw milk at 15-16 rubles per kilogram, the cost of producing butter (72.5% fat) is 170 rubles per kilogram, for powdered whole milk it is 160 rubles, whey powder - 160 rubles and powdered skimmed milk is 145 rubles per kilogram. "Russian producers already have considerable warehouse reserves of butter - around 10,000 tonnes and in the next few months we will face excess cheese, powdered whole milk and why powder stores," the Russian milk union said.
Russian and Belarusian agriculture departments have since 2009 agreed and signed predicted balances for several types of agriculture product on an annual basis, including milk and dairy products. The documents contain specific volumes for mutual supplies.