17 May 2024

3 minute read

By: Global Ag Media

Europe

Russia plans to grow its presence in the global dairy products market by increasing supplies by 15-20% annually with a big push into Arab countries - especially Algeria - and southeast Asia, the head of industry lobby group Soyuzmoloko told Reuters.

"Annually, the Russian dairy industry can show export growth rates of about 15-20%, but it is not excluded that the growth can go exponentially under the right conditions," Artem Belov said.

"If we are talking about a long-term perspective of seven to 10 years, we can increase supplies many times over."

Russia's annual dairy exports are now worth $400 million, or about 1% of a global market estimated at more than $40 billion, he said. The country officially stopped publishing dairy export statistics this year, but 2023 data show it doubled whey exports that year and increased the supply of milk powder by 4.7 times.

The biggest buyers until now have been Kazakhstan, Belarus, Uzbekistan, Azerbaijan, Armenia - countries that were once part of the Soviet Union and where Russian milk, cheese and cottage cheese are popular - as well as China.

The new target markets are in countries that Russia is courting heavily as it pivots its trade away from Europe.

"We already occupy a fairly comfortable position in the CIS market, so the main growth will be related to deliveries to the far abroad, specifically of dairy commodities," Belov said.

Russia does not make significant dairy exports to Western countries and dairy products are not subject to sanctions imposed by those countries.

The first dairy product deliveries to the UAE, Saudi Arabia, Oman, Tunisia, Egypt and the Philippines started last year.

Belov said there had been a "breakthrough" in Algeria, with a first delivery of 500 tons of skim milk powder (SMP) from the Volga region in December. The Bryansk Cheese Factory has opened a representative office in Algeria, and several other Russian enterprises are working on supplies.

"In 2024, Algeria may become the number one buyer and number one in terms of exports of dairy commodities. This market is huge and practically bottomless. If we can strengthen our positions there, we can create separate production facilities and build farms that will be aimed at producing goods exclusively for the Algerian market," Belov said.

"This is a very large market, many times larger than Russia's domestic production."

Russia currently exports 12 to 14% of the volume of SMP and whey it produces. Production of industrial milk rose by 4.9% to 25.8 million tonnes in 2023.

Belov noted the record volume of consumption of milk and dairy products in Russia over the past 15 years, suggesting that the country's production increase rate of 3-4% will be maintained with consumption growth forecast at 3% in 2024.

"Strategically, exports are the tool that will balance the situation on the domestic market".