Russia’s dairy industry wants to strengthen links with China. According to the Russian government agency Agroexport, Russia aims to export 30,000 tonnes of milk powder to China each year. Increased sales to international clients are required to address the projected local glut.
China, along with the Persian Gulf countries, are the most attractive export destinations for Russian dairy producers, according to Russian Agricultural Minister Dmitry Patrushev, who spoke at an industry conference in Moscow. He anticipated that the nation will export dairy products worth $400 million in 2022, virtually precisely the same as the previous year. On the other hand, 90% of Russian dairy exports are still destined for ‘near-abroad’ markets.
According to Agroexport, China will import 1 million tonnes of milk powder worth $4.43 billion in 2022, with New Zealand being the country’s biggest supplier, followed by Australia, the United States, Uruguay, and Belarus. Russian officials acknowledged that China remained a viable market for Russian dairy firms, but that fierce competition from other supply would be a significant problem.
The largest producer is on the rise.
EkoNiva, Russia’s biggest dairy producer, has announced ambitions to produce 1.3 million tonnes of milk in 2023, 100,000 tonnes more than the previous year. Meanwhile, the corporation acknowledged a reduction in demand in several product categories in the home market.
EkoNiva’s goods are already being exported to Kazakhstan, Armenia, Belarus, Uzbekistan, and China. Currently, the corporation is making efforts to enter markets in Southeast Asia and the Middle East.
Milk surplus of 2 million tonnes
According to Mikhail Mishenko, head of the Dairy Intelligence Agency, Russia and Belarus have a domestic market glut of about 2 million tonnes of milk each year. He added that Russia and Belarus form a single market since they share a shared customs space. He also warned of a drop in consumption, saying that if export sales do not increase, the dairy industry could face difficult times.
“The situation is unlikely to improve dramatically in the near future.” Consumption increase is not anticipated. As a result, we will be living in an era of overproduction. “There are two possible outcomes: a drop in production or an increase in exports,” Mishenko said, adding that, rather than relying on the Chinese market, Russian dairy producers could boost their presence in Central Asia.
“If we do not significantly increase exports, milk production will fall by the end of 2023.” We shall first experience a period of stagnation, followed by a period of decline. If we can improve exports, we may be able to survive,” he continued.