The sharp rise in the cost of feed and feed additives is forcing milk producers to save on this cost item, which negatively affects the productivity of farms. As a result, the growth rate of milk production in the first four months of the year decreased from 6% to 2% year-on-year. Market participants note that a weak rise in prices for their products does not allow them to compensate for costs, and ask for additional subsidies. The Ministry of Agriculture emphasizes the support measures already taken, but they are ready to “cooperate on the issues of their improvement.”
As Kommersant found out, at a meeting in the Ministry of Agriculture on June 2, General Director of the National Union of Milk Producers (Soyuzmoloko) Artem Belov announced a decrease in the growth rate of milk production in Russia. According to him, in January-April, the production of commercial milk increased by 2%, to 17.1 million tons, while a year earlier the increase was 6%.
Moreover, in six regions, which are among the key suppliers of milk, a decline in production was recorded. We are talking about the Vologda, Yaroslavl, Leningrad regions, Krasnodar, Krasnoyarsk and Altai regions. As Mr. Belov noted at the meeting, the positive trend in the development of the industry, observed in recent years, “can be broken.” Artem Belov confirmed to Kommersant that the meeting had taken place.
The reason is primarily in the increase in prices for high-protein or protein feed, which account for up to 60% of the cost of dairy farming. So, vegetable oil cake for the year has risen in price by 58%, to 26.8 thousand rubles. per ton, compound feed – by 27%, up to 17.8 thousand rubles. tons, feed grain – by 13%, up to 12.9 thousand rubles. per ton, follows from the presentation of “Soyuzmolok” presented at the meeting. The cost of milk does not compensate for these costs: according to the union, average prices for the year increased by 4%, to 27.9 rubles. for 1 liter.
As a result, said Artem Belov, some dairy enterprises have already reduced the consumption of expensive feed and their components, and small and medium-sized farms generally refuse to maintain dairy farms. The Losevo farm in the Leningrad Region, which also includes a dairy plant, said that they are selling the bulk of the heads as part of the company’s reorganization, process optimization and cost reduction, and are planning to purchase raw materials. Andrei Grigorashchenko, Vice President for Regional Development of Damate Group of Companies, confirms the growth in the cost of energy, feed and protein components necessary for the nutrition of highly productive dairy cows, noting that small farms primarily suffer from this. Dmitry Matveev, head of the board of directors of Kabosh Group of Companies, adds that veterinary drugs and components for crop production are also becoming more expensive.
In addition, there is a worldwide increase in feed prices, he recalls. But Mr. Rylko expects the situation to stabilize in the next couple of months. IKAR records record crops in the center of the country for soybeans, sunflowers and rapeseed, which will ensure an increase in supply.
Milk will be processed for export
Soyuzmolok believes that in order to prevent further development of a negative trend, it is necessary to increase subsidies for milk production from the current level of 1.79 rubles. for 1 liter. The proposal has already been sent to the Ministry of Agriculture. Damat considers it optimal to increase the subsidy by 2 rubles. for 1 liter.
The Ministry of Agriculture clarifies that the government has already taken a set of measures to reduce the costs of producers. Among them, in particular, the establishment of export duties on grain and the introduction of preferential short-term loans to livestock breeders for the purchase of grain, meal, cake and amino acids. The ministry continues to interact with industry unions, including on improving government support measures. By the end of this year, the Ministry of Agriculture expects milk production at the level of at least 32.6 million tons. In 2020, the figure was 32.2 million tons.