The price for milk
According to the Ministry of agriculture of the Russian Federation, the average price of raw milk for agricultural producers of the Russian Federation as of 29.11.2018 amounted to 23.96 rubles/kg. That is, according to the Ministry of agriculture, 15 kopecks less than at the same period last year. In general, market analysts agree that the average price of raw milk to date almost restored after a fall and are close to the level of 2017, but this situation is not everywhere and in general we can talk about a serious volatility of purchase prices in the regions of the Russian Federation.
By the way, Dairy Index RDRC (of the Russian Dairy Research Center) on December 10, 2018 amounted to 24.60 rubles/kg (excluding VAT, fat and protein content – 3.6% and 3.0% respectively), which is 0.29% higher than last week and 2.23% lower than in December 2017. The growth of the index was due to an increase of the price of raw milk in Russian regions according to the application Index RDRC, the import price decreased due to the strengthening of the ruble.
Analysts of the Russian Dairy Research Center note that according to the application Index RDRC, last week the weighted average price of milk in Russia increased by 0.43% to 23.32 rubles/kg, which is only 3.95% lower than the price in December 2017.
According to experts and market participants surveyed by The DairyNews, the price of milk may grow in 2019, but sharp jumps up should not be expected - in contrast to the situation with the price of raw milk there is a zero growth in consumption of finished dairy products.
As Russian Prime Minister Dmitry Medvedev said during a conversation with journalists of Russian TV, the real income of the population will grow by 1.6% this year.
Real wages in 2018 should grow by 4.1%, and the growth of real incomes should approach the level of 2.3%, noted earlier first Deputy Prime Minister and Minister of Finance Anton Siluanov.
Indeed, 2018, according to official data, was marked by an increase in real income of the population for the first time in four years, but in the fourth quarter its pace seriously slowed. In general, there is stagnation in the consumption of natural milk in the country.
According to Elena Stafeeva, the Head of the agricultural production cooperative “Plamya” and the Executive Director of the NP "Union of cattle breeders of the Urals", significant changes in dairy industry in 2019 should not be expected, there are some questions about the demand for raw milk next summer.
Some of the surveyed participants of the milk production market noted to The DairyNews that 2019 will be similar to 2017 for the industry; there is a risk of further reduction in demand for domestic raw materials, which will require maximum return in the optimization of production costs from enterprises.
Pricing in the dairy market is one of the most difficult issues in agriculture.
- For our farmers, the price is the theme of the year. Although, one must admit that over the past six months the purchase price rose from 18.5 rubles/kg to 23 rubles/kg. I think there will be a positive trend in December. As for next year, I would like the price to grow. But much depends on consumer demand. It is difficult to predict strong demand growth. Plus energy resources, utilities constantly rising in price... In other words, the growth rate of the cost of living outstrips the growth of incomes, - said Head of the Ministry of agriculture of Udmurtia Olga Abramova.
According to market participants, the issue of price remains important for the industry, but it is much more important to solve other problems that are becoming closer with the arrival of 2019. Meanwhile, for many of them, the situation leaves the industry in uncertainty. From the problems of waste disposal and new requirements for the identification of veterinary drugs in raw materials to the growth of prices for fuels and lubricants, EVC and low level of modernization of most of the industry.
