Raw-milk purchase prices could drop to 9 rubles/kg by summer
MOSCOW. Jan 26 (Interfax) - Purchase prices for raw milk in Russia may drop from the current 14.5 rubles per kilogram to as low as 9 rubles/kg by summer, Tatyana Rybalova, leading expert with the Institute for Agrarian Market Studies (IAMS), predicted at an international conference of agricultural producers and materials and services providers for the agrarian sector in Moscow on Tuesday.
Since the end of last year, Russia has seen a downward trend in raw-milk purchase prices, Rybalova said. The current average price for high-grade milk has reached 14.5 rubles/kg and its continues to rise. Dairy processors in some regions are buying it for 17 rubles/kg, but these prices are exceptional even for high-grade milk, she said.
Average milk purchase prices in Russia are already drifting toward 13 rubles, Rybalova said. With increasing milk yield in March and April, prices will again start to drop, she said. Dairy product prices will be rising more slowly, "as there is something of a gap allowing processors to suppress prices thanks to their profits."
Since the end of 2008, Russia has had in place technical regulations stating that milk produced from powdered milk has to be called a 'dairy beverage'. In actuality, Rybalova said, more than half the milk sold in Russia is dairy beverage, although it is not so designated on the label. "Diluting raw milk with reconstituted powder makes it possible for processors to realize huge profits," she said. "The need to rehabilitate powdered milk is at times accompanied by the most absurd reasoning, and in actual fact means the maintenance of windfall profits by major corporations and the further slaughter of dairy cattle."
"If the government finds the strength and desire to instill order in this segment of the market, then the price for raw milk will not only grow, but stabilize at a high level," Rybalova said. The government should do this so that profits in the commodity chain reach those who especially need them.
"Milk producers need help today, as we again find ourselves on the brink of a massive turning-away from dairy farming toward the use of powdered milk. To save animal husbandry at this stage is much more important than supporting processors who are not in trouble," she said.
The same amount of money spent building modern mega-farms, and purchasing modern equipment and pedigreed cattle could be used to build almost three modern processing enterprises, she said.