Ghost intervention

Источник: The DairyNews
Before the season of "big milk" the ghost of "white" intervention once again loomed on the market. Where is it needed and whether Russia will support "the purchase of Belarusian milk"? The DairyNews tries to find out.
Before the season of "big milk" there is a tendency of reduction of prices on raw milk in the regions. Once again the market started talking about a possible "white" intervention, re-announced more than one and a half years ago.

It has to be noted that last time the issue of procurement of milk powder, which was promised by the former Deputy Prime Minister Viktor Zubkov, a year later was declared insolvent.

The State Duma at plenary session on Friday approved in the first reading a bill that expands the list of persons, for whose support there can be carried out the state purchasing interventions. The innovation is aimed at stabilizing price fluctuations on the market of raw milk, significant demand for which is created by processing companies. Now, the authors of the document, the organizations and individual entrepreneurs engaged exclusively in primary of further processing of agricultural products, including butter, milk powder and skimmed milk powder from raw milk not produced by them, cannot participate in procurement interventions.

According to the draft order of the Ministry of agriculture, the minimum purchase prices for the intervention products in 2017 will be calculated on the assumption that raw milk costs 24 thousand rubles/ton. In particular, it is proposed to set the following prices: skimmed milk powder, freeze-dried – 222 thousand rubles/ton; milk powder, freeze-dried, except skimmed milk – 293 thousand rubles/ton; butter – 340 thousand rubles/ton.

Currently, however, according to the Russian Dairy Research Center (RDRC), the market price of raw milk is higher and can be relatively stable, despite the approaching peak season.

"We can see that the domestic market is experiencing a downward trend in milk prices, but prices on the global market, in case of further growth can maintain a relatively high price for raw milk in Russia", - stated in the report of the Russian Dairy Research Center about the latest update of the RDRC Index.
Dairy Index RDRC on April 24, 2017, made 25.00 rubles/kg (without VAT, with fat and protein content 3.6% and 3.0% respectively), 0.04% higher than the index value of April 17. The increase of the Dairy Index RDRC is due to the rising of import prices, amounting to 26.03 rubles/kg, 1.36% higher than last week. The index of domestic prices, however, continued to decline and made 24.65 rubles/kg, 0.4% below the previous value.

Potential regions targeted for dairy interventions can be Bashkiria, Tatarstan, Udmurtia, Chuvashia, Altai region, Orenburg, Saratov, Omsk, Novosibirsk, Nizhny Novgorod, Kemerovo and Penza regions. «Pre-specified Regions are those where there is maximum fluctuation in price. Most likely, the list of regions for interventions will be selected from them, if interventions are decided to carry out. Prices are not determined yet, the procedure is not agreed", - said earlier the source of The DairyNews in the Ministry of agriculture.

The unequivocal supporter of intervention in Russia is known today, it is the national Union of milk producers that was repeatedly stated by its representatives. The company Danone, a member of the Soyuzmoloko, also spoke about support of interventions, its representative said that the mechanism of intervention is the single market.

"I have a negative attitude to carrying out of a milk intervention, because in this way we will sponsor the purchase of Belarusian milk. I think this picture will be all over Russia. As for Voronezh region, milk interventions were not planned last year", - said Oleg Lakhov, Deputy Director of the Department of agrarian policy of Voronezh region.

We will remind, at the end of last year, Deputy of the State Duma of the Russian Federation Arkadiy Ponomarev said, according to official data, the shortage of raw milk in Russia is estimated at 30%. "The government spends billions of subsidies for the construction of farms, breeding cattle, because we have a shortage of raw milk and finished products, we didn’t reach the level of having surplus... But we already approved how to distribute them. But it also costs the Treasury a lot to compensate the enterprises the sterilization of milk, production of cheese, to provide the conditions for storage. What is the feasibility of all this? And, in fact, whose milk should we bring to a Fund? Belarusian? After all, its share on the Russian market is dominant" - said a member of the agricultural Committee of the State Duma.

As it was earlier stated by the Ministry of agriculture of Bashkortostan, the region can sell withing the framework of milk intervention of 2017 up to 1 thousand tons of whole milk powder, skimmed milk powder and up to 300 tons of butter.

According to representatives of the dairy industry of Bashkortostan, in the region there is still very high rate of seasonality and intervention for the market in the region is extremely important.

"It is high time to implement the intervention: May is coming, but we have no understanding of whether they are going to be carried out and who will participate in them. Somehow, everything is at the level of slogans. In my opinion, dairy intervention should be carried out not only in Bashkortostan. As I remember, there will be several pilot regions, but I think they should be held throughout the country. In Tatarstan, Udmurtia, Kirov region there is more milk than we have. I believe that the first step will be to take the TOP-30 leading producers of milk and start up this project. To intervene in a particular region is wrong, it does not solve the problem," said in an interview with The DairyNews Ildar Faizullin, Chairman of "The Dairy Union of the Republic of Bashkortostan" - "Now the price has gone down on average by 0.5-1 ruble. The neighboring Tatarstan played a big role in it, perhaps. Surplus of milk came from there, and, accordingly, they led to lower prices. Local milk producers do not low the price very much but Tatarstan does significantly. They were above us by about 2-3 rubles, and now they are lower by one ruble. This happened during a month," said Fayzullin.

Meanwhile, Udmurtia in late April announced the refusal from participating in milk interventions due to the fact that enterprises in the region are not satisfied with the conditions of the mechanism.

According to Rosstat, the production of milk on Russian farms of all categories increased by 1.5%. It is too far to self-sufficiency, but any increase in production could push domestic prices to decrease. Meanwhile, the price of imported raw milk is increasing.

Will there be any interventions in 2017? There is no clarity, as despite the adoption of the corresponding law by the State Duma, the implementation mechanism needs cash. In any case, even the news of the intervention, as the experience of last year showed, has an impact on the market of raw milk. Will lobbyists have enough possibilities to promote them? We will know soon, because in the midst of a season of great milk there is no sense to start them, and authorities may be too late for their start.

Read full article in Russian on DairyNews.ru
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