The dairy market is faced with overproduction: what does this threaten the Russians with?

Soon farmers will have to cut their cows as unnecessary

The age-old dream of Russians about milky rivers and jelly banks seems to be coming true. At least in the first part: stocks of dairy products in farms and processing enterprises amounted to 1.4 million tons! But this overproduction just adds to the headache for farmers. According to milk producers, last year Russia milked 800,000 tons more than a year earlier. And consumption in the country decreased by 200-250 thousand tons. The people do not have money for “kids for milk.” Where should we direct our “milk rivers”? Is it a waste product?

The question for domestic livestock breeders is not an idle one. Since the beginning of the year, the purchase prices for milk from peasants have fallen sharply – from an average of 28 rubles per liter to 22 rubles. Everything is getting more expensive: equipment on farms, electricity, feed, and the prices at which dairies accept milk have crept down. Despite the fact that the cost of production for farmers of the “middle hand” is 22-24 rubles. Then it’s time to start sending a dairy herd to the slaughter: it’s more expensive to feed a cow than to expect profit from it. However, the production of pasteurized milk, sour cream, butter continues to grow by inertia. For the first two months of the year – by 8%.

But the Ministry of Agriculture believes that not everything is so bad in the livestock industry. Large agricultural holdings benefit from lower purchase prices. They entered into long-term contracts (for three years) with processors with fixed prices for products. Let’s be happy for the big manufacturers. However, what should farmers and private households do? In recent years, the number of cows in their farms has increased significantly. And how to be now?

The consumption of dairy products has greatly decreased in the country. If in 2020 we drank an average of 240 liters of dairy products per person, in 2021 – 208, then last year – only 164 liters. Some experts suggest focusing on exports, selling excess milk powder, butter and whey to other countries.

Although, it would seem that in the current situation, the way out is quite simple. If we have a lot of raw and powdered milk (as it turns out, there is simply nowhere to put it), then we can reduce prices on the shelves. But prices do not even think of going down: on average, they rose by 18-20% on the sly. And today, when it is obvious that we cannot cope with milk rivers, in large cities a liter package of milk costs 70 rubles (at a discount), and if it is not available, then 100-120 rubles. Butter on the same wavelength with milk: 180 grams for a promotion – 180 rubles. And without discounts – 250 rubles …

It is clear that at such prices it is not necessary to hope that our consumer will master the formed stocks.

“Instead of working to restore demand, the dairy industry is stepping on the same rake,” said Marina Petrova, Deputy Chairman of the Moscow Chamber of Commerce and Industry Committee for the Development of Entrepreneurship in the Agro-Industrial Complex. – With a frequency of once every three years, there is a sharp decline in prices for raw milk, a reduction in livestock, followed by a new round of retail prices. In the current situation, cheese and butter could be included in the public procurement program. That would allow, for example, to feed the Russian army. And the current situation in the dairy market will lead to the fact that the peasants will begin to reduce their livestock in six months. And, consequently, the volume of raw milk production.

“Milk consumption in Russia per person is less than the recommended medical norms, therefore it is impossible to talk about overproduction,” says Igor Abakumov, Candidate of Economic Sciences, host of the Rural Hour program. – The current low purchase prices from the peasants will lead to a reduction in the country’s dairy herd. First of all, among farmers and in personal subsidiary plots. In which the quality of milk, unlike agricultural holdings, is as close as possible to natural – in taste, smell, fats and other indicators. At current prices, it is not profitable for them to keep cattle, they will be taken to the slaughterhouse ….

“But then our beef will get cheaper.

– In the short term – yes, but we will eat it quickly, in a month or two. But without milk, we run the risk of being left for many years, again we will buy calves abroad …

– Where is the exit?

– Introduce food cards for the poor to purchase domestic products. Then we will not notice where our “overproduction” will go.

Meanwhile, Russia’s plans for dairy products are Napoleonic. During the period from 2017 to 2022, cheese production in the country increased by 44%. There are preconditions for 80% of the domestic market to consist of Russian-made cheeses by 2030. But these beautiful plans run into harsh reality. How much milk will we get if farmers and personal subsidiary farms slaughter their livestock because of the unprofitability of production? And such a development of events is quite real.