Russia sees slump in dairy exports

17-01-2023 | |
Russia sees slump in dairy exports

Russia saw a 15% slump in dairy exports in physical terms in 2022 due to Western sanctions, logistics turmoil and a strong rouble, Roman Chyubak, manager of the National Dairy Producers Union, Soyuzmoloko, told local publication, Milk News.

In 2022, export supplies to several countries dropped, including Ukraine, the US, and China, though in monetary terms, foreign sales remained at the level of 2021, Chyubak said.

Changing regulations

Russian authorities intensified efforts to promote Russian dairy products on the global market. The Russian Agricultural Ministry has introduced certification of companies willing to export dairy products outside the Eurasia Economic Union, a Russia-led economic block also including Belarus, Kazakhstan, Armenia and Kyrgyzstan.

The new rules are scheduled to come into force on 1 March 2023. Chyubak added that they would make the Russian regulatory field more transparent for foreign regulators, while on the other hand, “help Russian dairy companies to better prepare for entering foreign markets”.

In addition, Russian dairy companies expect a twofold increase in funding of state aid programmes designed to bolster exports. Chyubak said that state aid is much needed, adding that it is primarily being spent on the certification of Russian dairy products for foreign markets.

New markets

The Russian Agricultural Ministry is also working on opening several new markets for Russian dairy products, such as Malaysia and India. In addition, negotiations on establishing the free trade zone between the Eurasia Union and Indonesia are scheduled to be held in 2023.

Russian dairy manufacturers also hope to take advantage of a concept of promoting Russian dairy products on African markets, developed last year.

Imports are also under pressure

Russian dairy companies also faced significant challenges importing some raw materials and equipment. “Foreign countries imposed sanctions of unprecedented scale, which led to restrictions on the supply of a huge number of goods,” Chyubak said, adding that this extended delivery time and made all imported products more expensive.

In the spring of 2022, the Russian government abolished import duties on 120 imported goods used in the dairy industry, such as packaging and equipment. In autumn, the measure was extended for another 6 months for nearly half of the original list, Chyubak said, expressing hopes that zero import duties will stay in place.

Nevertheless, Soyuzmoloko anticipates challenges pertaining to the import of equipment, components and raw materials for the dairy industry to persist in 2023, he added.

Vladislav Vorotnikov Eastern Europe correspondent