At the same time, the Center for the Study of Dairy Market (CSDM) published a report, in which it blames Soyzmoloko for obtaining strong competitive advantage for its members and pushing small farmers out of the market. Mikhail Mishchenko, head of CSDM explains: "The real purpose of the programme is very simple: the concentration of production [capacities], reduction in the number of entities receiving state support, and the concentration of this support in the hands of those who remained." The actual target of the plan, according to Mishchenko, is the creation of some sort of private club of milk manufacturers in Russia. "The members who want to sell their milk at a high price, plus having the state support," Mishchenko adds.
The fears of dairy farmers and analysts are associated with the fact that the proposed programme involves significant reduction in the number of dairy cattle in the country. According to the programme outline, the average milk production per cow is expected to grow by 35% in 2025, compared 60% growth in 2015. This means that the share of domestic milk, compared to the total consumption, should reach 91% versus 74%, while dairy herd numbers are expected to drop by 27%.
New dairy programme - could do more harm than good
According to Mishchenko the programme for improvement of effectiveness may actually not be so effective. And there are several analysts who are in full agreement with him. They claim that, in general and despite arguments of Soyuzmoloko, the new plan will bring more harm than benefit to Russian dairy industry. In particular, as explained by Cyril Yakovenko, analyst at the country’s consulting agency Alor broker, implementation of the programme will result in a reduction of competition at the market. This is because the ‘big players will get the subsidies and discounts from the state, while the small farmers continue to fight against bureaucratic obstacles because they are a minority.
Dmitry Lukashov, analyst at IFC Markets, claims that this plan will lead to "creation of an oligopoly or a private club of manufacturers who will control the largest stake of the Russian dairy market. And this situation will eventually lead to degradation of the industry. Kirill Morozov, CEO of the analytical agency M9 AGRO, says that this plan "aims to not improve the situation, but to create a high threshold to enter the market for smaller players," The new programme is currently being reviewed by the government. After some public hearings, it should be adjusted and adopted. This will most likely happen at the end of 2016.