The growth of industrial milk production doubled in January 2023

The production of marketable milk on industrial farms in January 2023 increased by 6.8% to 1.6 million tons compared to the same period last year. This is evidenced by the data of the Soyuzmoloko association, provided at the request of Vedomosti. The increase was ensured by the increased level of animal productivity: January milk yields rose by 6.8% to 711 kg per cow year on year.

The growth rate of output in January 2022 was more than two times lower: then by January 2021 they increased by 3.3% to 1.49 million tons.

Organized sector growth in January 2023 is higher than the industry average for all of 2022, says Alexei Gruzdev, head of Streda Consulting. According to Soyuzmolok, the production of marketable milk in all types of farms increased by 4% last year to 24.65 million tons.

The association predicts similar dynamics for 2023. This is a reflection of a long-term structural trend in which milk production in the unorganized sector falls due to low efficiency, and these volumes are replaced by industrial enterprises, says Gruzdev.

The trend is confirmed by Rosstat data for 2022. According to the service, milk production in all types of farms increased by 2% to 32.9 million tons (including products that do not enter the market, but are used for personal consumption). The organized sector accounted for 19 million tonnes, up 4.7% from a year earlier. The output in households decreased by 2.1% to 10.9 million tons, while in peasant and farm enterprises it increased, but only by 0.9% to 2.96 million tons.

Gruzdev points out that the need to increase domestic milk production remains, including due to the fact that it is constantly required to replace these falling volumes. Otherwise, according to him, the industry may quickly face the problem of reducing gross production. The Minister of Agriculture Dmitry Patrushev estimated the level of self-sufficiency in milk in Russia at the end of January at 84.3%, if it is necessary to achieve the indicators of the food security doctrine at 90%.

Investments in the industry will continue for at least 5-7 years, including due to the preservation of state support mechanisms, such as reimbursement of capital costs for the construction and modernization of farms and concessional lending, Gruzdev believes.

Plans to increase production were confirmed by the largest milk producer in Russia, Ekoniva Group. According to the representative of the group, in 2023 it is planned to increase the production of milk from 1.2 million to 1.3 million tons. The increase will be ensured by the completion of construction and commissioning of two livestock complexes in the Moscow region and Tatarstan.

In 2022, the consumption of dairy products decreased by 1-1.5%, according to Soyuzmolokao data. But against the backdrop of the need to replace falling volumes, the tendency to reduce consumption due to rising prices with weak income dynamics on an industry-wide scale is important, but not critical, Gruzdev believes. According to him, the market still needs new volumes of raw milk, especially when it comes to high quality and large commodity lots of raw materials. EkoNiva sees a demand for high-quality natural dairy products both in the domestic and foreign markets, primarily in China, the Middle East and Southeast Asia, a company representative reported.