Moscow is to pump an emergency RUB30 billion (EUR391.3 million) in dairy industry support to alleviate a supply crisis triggered by sanctions and its trade embargo.

The move, approved by President Putin, was announced by deputy prime minister Arkady Dvorkovich during the VI Congress of the National Union of Milk Producers, one of the most important annual events in the Russian dairy industry.

In addition to financial support will be simplification of the procedure for the provision of subsidies per tonne of milk as well as tying the amount of subsidies to the key rate of the Russian Central Bank.

According to Dvorkovich, subsidies will remain high even in the case of reduction of the Bank’s key rate.

There will also be restrictions placed on the trading margins of retail chains on what are deemed “ “socially important” dairy products.

The national Federal Anti-Monopoly Service will also be given extra powers to control dairy prices.

Dvorkovich said the government also plans to continue implementation of the current state policy of the import replacement in the national dairy industry, reducing the share of EU dairy products in the national market, in favour of supplies from other countries, such as Argentina, Serbia and some others.

In the latter case, according to Dvorkovich, imports of cheese, curd and other dairy products from Argentina and Serbia in 2014 more than doubled, compared to 2013.

At the same time, according to Dmitry Yuriev, Russia’s deputy Minister of Agriculture, as part of the state plans, the production of raw milk in Russia this year should significantly increase.

He said during the period of 2008-2014 1,800 dairy farms and complexes were commissioned and modernized in Russia, which allowed to increase domestic milk production by 1.1 million tonnes.

He added that this year 587 dairy investment projects would be subsidized by the state. This would increase milk production by a further 0.5 million tonnes.

The volume of investments is estimated at RUB35 bln (EUR456.5 mln), most of which will come from the federal budget.

According to Yuriev, huge state support last year resulted in increased raw milk productionfor the first time in years. In 2014 it amounted to 30.5 million tonnes, which is by 0.1% higher than in 2013. However, this is not enough. According to state plans, the volume of milk production in Russia should be increased by 2 million tonnes during the next two years, in order to compensate for the lack of now banned imports from Western countries.

At the same time, according to data of the Ministry of Agriculture, total imports of milk and dairy products to Russia last year declined by 11%, compared to 2013 and amounted to 8.4 million tonnes.

Representatives of leading dairy producers welcomed the plans but said that much will depend on their implementation.

According to an official representative of Rusmolko, one of Russia’s leading dairy producers, much will depend on the ability of the state to solve the problem of corruption in the national industry, especially during the distribution of state support and subsidies.

agra-net.net