Russian Dairy Union asks the government to pay off its debts



Russian Dairy Union asks the government to pay off its debts

RSPMO (Russian Dairy Union) management board asks the Ministry of Agriculture to pay off its debt to IDF (International Dairy Federation) and IFCN (International Farm Comparison Network) to the amount of more than 92 thousand euro (around 3.7 mln rubles).

According to a paper, DairyNews has on hand, Russian Dairy Union directorate asks the Ministry of Agriculture to undertake its debt to IDF and IFCN for membership in these organizations in 2011 and 2012 and further contributions covering.  

The first letter to the Ministry was signed on 20 September 2012 by RSPMO Executive Director Vladimir Labinov - a day before he took the position of the head of the Department of Animal Husbandry and Breeding at Russian Ministry of Agriculture. Further letters to the Ministry were signed by Union Acting Executive Director Eugeny Kuplyauskas, on 15 April and 13 May 2013.  

According to V.Labinov, PepsiCo and Danone-Unimilk’s, largest participants of the Russian dairy market, withdrawal from the Union in 2011 is the main reason for tight financial resources.  




In December 2012 Information Agency DairyNews published an article “Who wants your milk?” dedicated to Russia’s participation in IDF importance. A question of appropriateness of Russia being represented in IDF by RSPMO was also raised in the article. As a reaction the notice provoked a conflict between DairyNews and RSPMO consultant Vladimir Labinov


Meanwhile question of Russia being represented in international organizations by RSPMO needs careful consideration.  


DairyNews conducted an investigation and the results of this work put in doubt legitimacy of some of the Union’s activities, and also point to the Union’s former head self-interest.  



The so-called Russian Dairy Union 


Russian Dairy Enterprises Union (Russian Dairy Union/RSPMO) was established in November 2002 (added to the Unified State Register of Legal Entities/USRLE - according to the data from System of professional market and company analysis Interfax -SPARK). Founders of the Union - are dairy industry enterprises, the majority of which were a part of Vimm-Bill-Dann. One can get acquainted with the Union’s history, performance and main points of development in more details from the interviews with Vladimir LabinovTatiana Krikun and Larisa Abdullayeva.    


However PepsiCo, which has bought Vimm-Bill-Dann, and Danone, which integrated with Unimilk, left RSPMO. DairyNews editorial called around each company, pointed as Union member, with a question about their membership in the Union and membership fees.  


As follows from the research performed, the majority of companies, included into the Union’s membership list, do not pay any fee. Moreover, existence of some of these companies, like Syrokombinat Pereslavsky, aroused suspicion.   


DairyNews managed to confirm membership in the Union of the following companies: Campina; Molochny Kombinat Voronezhsky (Molvest); Ehrmann; Parmalat; Moloko, OAO (Arkhangelsk Region); Molochny Zavod Pogarsky, OAO; Shekhon-Laktuloza; Molochny Zavod Magadansky. Their total volume of milk processing may be estimated at 1.1 mln tons per year, what is not more than 7% from the total volume of commercial milk produced in Russia.  



Representatives of the following enterprises confirmed their noncontributory membership in the Union: Maslosyrzavod Tbilissky; Korenovsky Molochno-Konservny Kombinat, ZAO; Experimental Cheese-Making Plant at All Russian Research Institute of Cheese and Butter Making; Prechistensky Molochny Product, OOO; Vereshchagin Experimental Training Dairy Plant (Vologda); Molochny Zavod Irbitsky; Molochny Kombinat Orenburgsky, OOO; Manufacturing Company MOLOKO Nizhnyaya Pravda; Molochny Kombinat Kropotkinsky, OAO (Krasnodar Region); Dairy Plant Prosheninsky; Moloko Buryatii, OAO (Buryat Republic).  


DairyNews didn’t manage to receive any information about the other enterprises.   


Consequently, an organization which covers not more than 7% of the Russian dairy market still represents the country’s dairy sector on the international market and asks the government pay for this.  



“A pocket union”, or industrial fiction  


It seems like the Union functions as a “shelter” and contrary to the initial goals and objectives is used to solve personal problems of a certain group of people. Union’s business reports and its structure contribute to this thought. 


Let’s start from the structure.  



Executive Director. 


According to the data available on the Union’s web-site Eugeny Kuplyauskas is holding the position of RSPMO’s Acting Executive Director for the last 9 months.



In March 2013 within the Conference “Dairy Industry” Vladimir Labinov announced in a farcical manner that he is leaving the position of Executive Director of the Union. Evidently, a deserving candidate to supersede him wasn’t found. Or may be nobody tried to find one? 


According to information, DairyNews cleared up, as per USRLE, Vladimir Labinov is performing functions of Executive Director starting from August 2011 till now (as of 23 April 2013) and is able to act with full authority (Interfax-SPARK data). Notably that the last amendment to the USRLE was made on 16 August 2011.  


Download the file.



RSPMO management. 


Vladimir Haritonov, Russian Academy of Agricultural Sciences member – President of the Union 


Arkady Ponomarev, State Duma Deputy - Chairman of Board of Directors 


Members of the Board according to the RSPMO’s web-site:  


1.        Bahtina Irina Sergeevna Inmarko, OAO 

2.        Gorlenko Ivan Ivanovich Molochny Zavod Pogarsky, OAO  

3.        Konovalov Arkady Leonardovich Molochny Zavod Magadansky, ZAO 

4.        Malikov Anatoly Aleksandrovich Moloko, OAO 

5.       Molotov Sergey Vladimirovich Vereshchagin Experimental Training Dairy Plant 

6.        Panchenkov Mikhail Viktorovich Prodinvest Company, OOO 

7.        Pilcshikov Eugeny Leonidovich Molochny Zavod Irbitsky 

8.        Polyak Aleksandr Lvovich Molinform, ZAO 

9.        Ponomarev Arkady Nikolayevich RSPMO Chairman of Board of Directors, Molochny Kombinat Voronezhsky, OAO 

 10.     Rogov Iosif Aleksandrovich Association University Center for Applied Biotechnology 

 11.     Sviridenko Yury Yakovlevich All Russian Research Institute of Cheese and Butter Making  

 12.     Suhih Denis Aleksandrovich Milkow, OOO 

 13.     Tuzhilkina Larisa Ivanovna LenAgroKonsalt, OOO 

 14.     Haritonov Vladimir Dmitriyevich RSPMO President, All-Russian Dairy Research Institute  

 15.     Shirinkin Aleksandr Ivanovich Molochny Kombinat Tulsky, OAO 

 

If to analyse the list, it’s easy to conclude that the number of real dairy processing companies in the Union’s Board is small:  


Inmarko – ice-cream producer, first of all a Union of Russian Ice Cream Makers member; 


Gorlenko Ivan is no more known as head of SPEKTR (milk powder supplier); 


Molochny Zavod Magadansky – is a full member of the Union; 


Moloko - is a full member of the Union; 


Vereshchagin Experimental Training Dairy Plant – does not pay membership fee; 


Prodinvest Company – is a milk powder importer;  


Eugeny Pilcshikov is not heading Molochny Zavod Irbitsky since October 2012 (http://www.dairynews.ru/processing/glavoy-irbitskogo-molochnogo-zavoda-naznachen-byvsh.html), the enterprise itself does not pay RSPMO membership fee; 


Molinform, ZAO – is not a milk producer; 


Molochny Kombinat Voronezhsky, OAO – is a full member of the Union; 


Association University Center for Applied Biotechnology – no comments; 


All Russian Research Institute of Cheese and Butter Making (VNIIMS) – no comments;  


Milkow, OOO – milk powder importer; 


LenAgroKonsalt, OOO – impossible to get any information about the company, no web-site; 


All-Russian Dairy Research Institute – no comments;  


Molochny Kombinat Tulsky, OAO – is not RSPMO member. 


From the fifteen members of the Board – three are not actually Union’s members or do not pay membership fees, another three as minimum – are milk powder importers. Hence, the Union’s managing body appears to be fictitious.  


Judging by the information from the Union’s web-site, nearly the same appear the RSPMO’s activities.  


For example, among the last “Union’s Projects” – are plans for 2011-12. The most important among them – are work under technical regulations, maintenance of the Technical Committee for Standardization TC 470, creation of Intergovernmental Technical Committee and maintenance of the National Committee of Russian Federation within the International Dairy Federation (IDF).  



Other RSPMO web-site sections: 


Technical Regulations 



Technical Committee TC 470



International Committee IDF – government money asked for                                                                                                                                  



Legislation 



Events in Russia 



In general, RSPMO web-site news feed analysis makes it clear, that the majority of the authentic news-articles are devoted to Vladimir Labinov as head of the Department of Animal Husbandry and Breeding at Russian Ministry of Agriculture and as head of TC 470 activities, as well as to TC 470/ITC 532 (Interstate Technical Committe) work.  


So, RSPMO activities as non-profit union aimed to represent and protect its members’ interests in state and municipal authorities, noncommercial and international organizations, seem to be doubtful. Absence of distinct programmes and activity reports, and also members’ withdrawal since 2011, prove the above mentioned statement.  


The only activity the Union (actually TC 470, created on Union’s base) is maintaining – is activity devoted to “improvement and creating of industry-based standards base”.  


What is a Technical Committee and what is it busy with? 



Technical Committee.  


TC 470 was established by the order of Federal Agency for Technical Regulation and Metrology from the date of 10.10.2005 №1323 (06.12.2012 revised) “About setting up a Technical Committee for Standardization “Milk and Dairy Products”. As per the order, Larisa Abdullaeva, RSPMO standardization group head, was appointed to the position of TC Executive Secretary. By the order of Federal Agency for Technical Regulation and Metrology from the date of 06.12.2012 №1098 Vladimir Labinov was appointed to the position of TC Chairman. This is his third position held.  


Download Rosstandart Order 


Download Rosstandart Order


It is important to take note of the fact, that Technical Committee’s work is aimed at national standards development, i.e. rules of products manufacturing and marketing. National standards are subordinate legislations and are created within the current legislation, in this case - Federal Law on Technical Regulation; and in respect to TC 470 - Technical Regulation on Milk and Dairy Products. I.e. these documents define “rules of the game” on the (dairy) market.   


It is also important to take note of the fact, that Technical Committee consists of 29 members, 5 of them – are commercial organizations: Dairy Plant Lianozovsky, OAO (is a part of PepsiCo), Infant Dairy Products Factory, OAO (is a part of PepsiCo); Hochland Russland, OOO; Danone Industriya, OOO;  Kubanmoloko, AOZT. We come to an interesting paradox: companies, which once have left RSPMO (PepsiCo, Danone, Hochland) and are officially in opposition to RSPMO, are at the same time members of TC which acts on the Union’s basis. According to DairyNews data, these companies’ membership in TC is not formal, they are really fully engaged in the process of national standards development.   


It turns out that a small group of people headed by Vladimir Labinov develop national standards. In a recently published by DairyNews interview with Tatiana Krikun, Head of Food Committee of the Consumer Market Participants Union, a problem of poor discussion of National State Standards was raised. DairyNews editorial believes this can influence the process of decision taking in favour of separate dairy market participants.  


And one more significant issue of the Technical Committee work – funding. 


As a rule national standards development is financed by the government. The amount of money allocated for these purposes is usually fairy large. For the development and preparing for approving the standards for milk and dairy products for 2013/14 8.960 mln rubles was allocated by the government. To support the entry financially it is necessary to pay 448 thousand rubles. Today TC 470 is implementing this state order, and will get 3.320 mln rubles in 2013 and 5.640 mln rubles in 2014 for it.  


For example, for the development and preparing for approving the standards for food and food testing Federal Agency on Technical Regulating and Metrology allocated 33.960 mln rubles.  


Hence, the financing is significant. But where it arrives in case if, for example, TC wins a tender for standards development?  


According to the DairyNews information, the allocated money arrive in the account of an attached to RSPMO Scientific and Technical Committee Dairy Industry Company Limited (Russian - NTK Molochnaya Industriya, OOO; hereafter referred to as Dairy Industry). Eugeny Kuplyauskas (RSPMO’s Acting Executive Director) is its General Director, before 24 December 2012 Vladimir Labinov held this position. Vladimir Labinov and Eugeny Kuplyauskas are co-owners of Dairy Industry (50% stake in the company each). Company’s contract value in 2011 totaled 7.580 mln rubles, in 2012 – 8.450 mln rubles.  

DairyNews also has a cost estimate of one of the orders.


Download information about Dairy Industry (in Russian)


Download cost estimate (in Russian) 



Consequently, the state funds, allocated for national standards for milk and dairy products development, hit the account of a company which belongs to the head of the Department of Animal Husbandry and Breeding at Russian Ministry of Agriculture Vladimir Labinov.



Summing up, key facts and dates: 


20 September 2012 – Vladimir Labinov sends a letter to the Ministry of Agriculture with a petition to finance RSPMO’s membership (under the guise of National Committee) in IDF and IFCN 


21 September 2012 -  Vladimir Labinov takes the position of Director of the Department of Animal Husbandry and Breeding at Russian Ministry of Agriculture 


6 December 2012 - Vladimir Labinov is appointed to the position of TC 470 Chairman 


24 December 2012 - Vladimir Labinov yields the position of Director General at Dairy Industry 


An attempt to centralize all Russian dairy industry control levers using state funds and official powers is evident. A non-profit organization, which does not represent the majority of the dairy sector and which was formed by former members is used for it. Among the other evident facts - an attempt to keep influential role on the Russian dairy market and to keep an executive right to represent the country on the international market: influence on the Technical Committee and International Technical Committee, attempt to control international relations, and first of all information flows.  


In conclusion it’s worth mentioning, that during the last three months DairyNews is maintaining unceasing correspondence with IDF with a propose to reconsider Russia’s membership in this organization as the main topic under discussion. A new National Committee with a possibility to become its member for each leading market participant – dairy producers and processors – is needed for proper representation of our country on the international market. This step could contribute to forming more transparent relations between Russia and other players of the global dairy market, and also to defending country’s interests in a true way.   

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