The cost of milk production in Russia may increase by 12% in 2020

Источник: The DairyNews
The increase in the cost of milk production due to the weakening of the ruble and the rise in the cost of ruble items of expenditure may be about 12% in 2020, said Alexey Voronin, Director of the Analytical Department of the National Union of milk producers (Soyuzmoloko), on Thursday via video link at the forum "AgroOmsk - 2020". This will affect the price of dairy products as components are introduced to the production process at new prices.

The official exchange rate of the US dollar relative to the Russian ruble, set by the Bank of Russia, increased in the period from January 1 to July 31, 2020 from 61.90 to 73.36 rubles (+18.5%), the Euro - from 69.378 to 86.25 rubles (+24.3%).

"The weakening of the ruble significantly increased the cost of imported components of the cost price: these are gene materials, vaccines, disinfectants, spare parts for equipment. <...> According to our estimate, only due to the weakening of the ruble, the cost of [milk production] in 2020 can grow by 5-6%. < ... > The total cost growth, taking into account the rise in price of both ruble items of expenditure and the import components, may be about 12%", said Voronin.

According to him, these factors will play a stronger role in the second half of 2020. "At the same time, we understand that the effect of the devaluation on the price [of products], on the operating cost will not be reflected simultaneously, but as components are introduced into the production process at new prices", the expert said. He stressed that one of the key tasks of the dairy and milk processing industries is to optimize costs at all stages. 

Voronin added that during the coronavirus pandemic, the decline in the population's ability to pay had a negative impact on the demand for dairy products. "Growing inflation will contribute to the fact that the population will continue to be very selective and careful about their expenses, giving preference at some points to less expensive goods", he said. - Already in the middle of summer, there is a shift in demand for cheaper analogues, for example, from cheeses to cheese products, from butter to margarine. So far, this phenomenon is not mass, but such signals are coming". 

The national Union of milk producers was established in 2008 to represent and protect the interests of milk producers and processors in state authorities, public and international organizations. The Union consists of about 200 companies that produce 70% of Russia's milk and dairy products, as well as equipment, technologies and ready-made solutions for farms, feed, packaging materials and veterinary drugs for the industry.

The forum "AgroOmsk" is held annually in Omsk and gathers experts in the field of agriculture from all over Russia. This year, due to the coronavirus pandemic, the event is held in an online format. The organizers are the Ministry of agriculture of the region and the Agency for development and investment of Omsk region.

Read more at © DairyNews.ru

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