IDM ¦ Markets
18 · June/July 2020 ¦ international-dairy.com
Dairy products consumption is not going to go down in Russia,
despite Corona
and this should be good for Russia,
which is exporting primarily low-price
dairy products and raw materials, Snitko
explained.
There is a handicap between the
Russian dairy companies and their competitors
in the European Union and U.S.
whose operations were disrupted by the
coronavirus. Stefan Duerr, CEO of the
Russian dairy company EkoNiva, stressed
that not all countries have the same situation
as in Russia, where most companies
continue operation in spite of the
epidemic and there are high chances that
this could aid the company’s export.
There is no information that the operation
of even a single dairy company in
Russia has been disturbed by the coronavirus.
To combat Covid-19, Russian President
Vladimir Putin introduced a nationwide
holiday month effective March 28.
A significant portion of companies was
ordered to shut down their operation, but
the entire food industry was allowed to
continue working as usual, while adhering
to strict sanitary measures.
Billions keep flowing
Covid-19 is not going to hamper the investment
potential of the Russian companies as
well. In 2019, investors pumped Rub91.6
billion ($1.4 billion) into various projects in
the dairy industry, the Russian Agricultural
Ministry estimated. In 2020, this figure is
expected to be even higher.
A research conducted by the Moscowbased
think tank MilkNews showed that
building of new milk farms and dairy plants
so far has not been negatively affected
with the quarantine measures.
All projects launched before the epidemic
are running fully in accordance
with their schedules, said Leonid Besmertnyukh,
marketing director of DeLaval in
Russia. There are certain difficulties with
new projects, which are only under consideration,
since the devaluation of the
Russian ruble increased investments costs
on new builds, while in terms of profitability
their future is not fully clear. And
yet there are examples when the negotiations
on the new projects between technology
providers and investors continue
and some win-win solutions are found,
Besmertnyukh added.
Most companies are simply not hurrying
up with their investment plans, but
there is absolutely nothing unusual about
that, commented Pavel Zhadobin, manager
of GEA. Clients usually spend years
to get funding for their projects and some
additional time to get subsidies, so, 1.5
months of quarantine are not likely to
change things dramatically in this field,
Zhadobin added.
According to Artem Belov, the Russian
dairy industry is attracting not only Russian,
but also foreign investors. For example,
the German DMK Deutsches Milchkontor
GmbH harbors some investment
plans as well as French company Savencia
is on the way to launch cheese production
in the Republic of Bashkiria. There are also
some projects harbored by Chinese investors
on the Russian Far East.
For the foreign investors establishing
export supplies is among the rationales
to invest in the Russian dairy industry,
Belov said.
There are certain indications that
the investment potential of the industry
may even improve with the Covid-19
epidemic. During the government meeting
on May 15, the Russian Agricultural
Ministry preliminary approved some additional
state support measures for the
dairy companies.
In particular, Oksana Lut, deputy Russian
Agricultural Minister promised to
expand program of soft loans dairy business
could seek in the state-owned banks,
plus to consider abolishing import tariffs
on feed, breeding stock, drugs and equipment.
Soyuzmoloko is also asking the
government to subsidize costs of electricity
and increase subsidies on capital costs
under new projects.
More importantly, the government
agreed to postpone the introduction of
Russia government approves additional
state aid to milk farmers
Russia is going to increase milk production by 3 million
tonnes
/international-dairy.com
