Prices for dairy products are not expected to rise by the summer - Ildar Fayzullin

Earlier, the Dairy Intelligence Agency (DIA) reported that, according to the Dairy Index DIA application, the weighted average price of raw milk in February 2021 was 4% higher than last year for the corresponding period.

Ildar Fayzullin notes that milk processors change prices very rarely: this usually happens 1-2 times a year and no more than 3%-5%, and forced, due to the increase in cost. So, the main reason for the current growth in a number of regions, the expert believes the high level of prices for raw milk.

He said that, according to the operational data of Rosstat for January, in Bashkortostan, the price of drinking milk with 2.5-3.2% fat content amounted to 51.19 rubles per 1 liter. This is 0.5% higher than in December, and 5.7% higher than in January last year. On March 1, the price was 51.27 rubles, an increase of 8 kopecks compared to the level of February – that is, the growth is insignificant.

Ildar Fayzullin noted that price increases always have a negative impact on demand, especially when the income of the population does not grow.

‘Due to seasonality, there is more milk in the summer, and prices, as a rule, do not increase, but slightly decrease. According to preliminary data from the Russian Ministry of Agriculture, a good grain harvest is expected this year, as well as an increase in milk production by 2.5%. Therefore, we do not expect an increase in prices for finished dairy products due to the increase in prices for raw milk,’ the expert said.

He noted that in the market conditions, the price growth cap is in the area of excess of supply over demand.

‘People always want to eat, so food will be in demand in any, even the most unfavorable financial time – during the crisis. Dairy products belong to the main food products, along with bread, meat, vegetables and fruits. Therefore, the demand for milk will be at any time. The other matter is in what volumes and at what price,’ said Ildar Fayzullin.

As for the monitoring of prices by the government, according to the expert, monitoring is an observation that in itself does not have any impact on the situation. Another thing is the actions made on its basis. Therefore, Ildar Fayzullin considers it very important that these actions correspond to market mechanisms and conditions.

‘The concept of "price restraint" does not mean price fixing. The restraint allows for slow or small change. However, the nature of price changes in our industry has long been "restrained",’ the expert concluded.