Top 30 milk producers by Soyuzmoloko

Источник: The DairyNews
Yesterday, the industry union Soyuzmoloko together with Streda Consulting held a presentation of the top-30 rating of the largest milk producers. The DairyNews tells how it proceeded.

Short introduction

General Director of Soyuzmoloko Artem Belov traditionally presented an overview of the situation in the dairy market.

The expert reminded that in 2021, the growth rate of commercial milk production began to slow down in our country.

‘The momentum in the sector was given in 2014; it was associated with the double devaluation of the ruble and the closure of a number of importing countries, which were significant in terms of the supply of milk and dairy products. As a result, the market has formed a good demand for raw milk and a good yield. State support measures were changed, capex appeared, and as a result, over the past six years, the average annual growth rate of commercial milk production was 3%. At the same time, in 2019 - about 4%, in 2020 - 5%,’ said Artem Belov.

According to Soyuzmoloko, currently about 23 million tons of commercial milk is produced in the Russian Federation.

At the beginning of the year, the market received preserved areas of state support for the dairy industry, and support measures were expanded due to Covid-19.

‘At the beginning of the year, the situation developed according to a fairly favorable scenario, but at the same time, we see a number of risks that it would be wrong not to mention,’ said Artem Belov.

The expert stressed that in 2020, the increase in the production of commercial milk for the first 4 months of the year was 6%, in the same period of 2021 - 2%.

‘So far, we are recording a positive trend. But since the beginning of the year, the traditionally dairy regions – Krasnodar, Leningrad, Vologda and Altai regions - have shown negative dynamics in milk production,’ said Artem Belov.

‘The increase in the cost of milk production has led to the fact that in a number of regions productivity is either reduced, because diets are changing. Or in a number of regions, medium-sized and small farms change their profile, leaving animal husbandry for crop production. All this is a significant risk,’ said the Head of Soyuzmoloko, noting that the trend of consolidation in the industry may increase.

It should be noted that according to Dairy Intelligence Agency (DIA), the production of raw commercial milk in Russia in 2020 amounted to 20,665 thousand tons, 5.4% higher than in 2019; for comparison, in 2019, the production growth was 4.8%. We remind that DIA takes into account only peasant farm holdings and agricultural enterprises.

‘The year 2020 showed a very good growth in raw milk production in Russia. At the same time, in the first quarter of 2021, there was a slowdown in the growth rate of milk production compared to 2020, in January-March 2020, milk production in Russia increased by 7.7% compared to the corresponding period in 2019, in January-March 2021, the growth was only 2.3% to 4991.1 thousand tons. It is important to note that the number of cows in Russia in 2020 amounted to 4.4 million head, 3.3% lower than in 2019. The average productivity rate reached 4,647 kg per cow per year in 2020, which is 8.9% higher than in 2019,’ note analysts in Dairy Intelligence Agency.

According to DIA, the price of raw milk on the Russian market in 2021 has been held at a high level, above 29 rubles/kg for a long time; only in June 2021, according to the crowdsourcing application Milk Price Index DIA, the price began to decline, today the price of raw milk in Russia (excluding VAT, fat-3.6%, protein-3.0%) is 29.69 rubles/kg, about 10% higher than June 2020.

By the way, during the presentation of the rating by Soyuzmoloko, Artem Belov called the increase in the cost of production a risk that ‘may affect the willingness of investors to invest in the milk production industry.’

According to Soyuzmoloko, year-on-year, as of April 2021, the cost of raw milk production in the Russian Federation increased by 17%.

Who is in the top?

The rating consists of 30 enterprises and in fact the threshold for entering it ends at about 50 thousand tons of milk produced per year.

Alexey Gruzdev, director of Streda Consulting, presenting the rating, stressed that in 2020, the top 30 enterprises produced 3.6 million tons. As a result, the share of the top 30 in the total volume of commercial milk increased to 15%.

‘Since 2016, in five years, the share of players has increased from 10 to 15% - from 2 million tons to 3.6 million tons. It is clear that Ekoniva, which produced almost a million tons of milk, makes a great contribution, but nevertheless, the remaining players show serious results,’ Alexey Gruzdev said.

According to the expert, it is difficult to talk about consolidation in the dairy industry, similar to what is happening in related sectors of agriculture. However, the level of this trend is growing.

‘Consolidation is mainly growing not due to M&A transactions, there are not so many of them on the market. It is stimulated by the organic growth of the companies themselves,’ said Alexey Gruzdev.

The changes in the ranting occurred mainly at the bottom of the list.

‘KOMOS Group has left the rating, and Damate complex has been added. 90% of the rating companies are growing, the negative dynamics is only in the agricultural enterprises of Tatarstan,’ Alexey Gruzdev said

Rusmolko Company took the third place in the rating, due to the introduction of new capacities, which allowed it to rise six lines up. In addition, the fifth place was taken by the Group of Companies Doronichi.

‘Ekoniva increased production by more than 300 thousand tons in 2020. We expect that by the end of 2021, the holding will definitely produce more than 1 million tons of milk. And in the coming years, it will enter the top 5 independent dairy companies in the world,’ said Alexey Gruzdev.

The expert noted that Rusmolko stands out among the leaders - in 2020, it increased its livestock by 67% and the launch of three large complexes allowed to increase milk production by 39 thousand tons.

Agropromkomplektatsiya Group (+25 thousand tons of milk per year), Zalesie Group (+19 thousand tons per year) and Agroholding Step' (+13 thousand tons per year) were also among the leaders in terms of production growth.

‘Investments are being made, complexes are being built, and there is an increase in both livestock and productivity. If we look at the increase in the volume of commercial milk, then what the industry has been long fighting for, we will see that a very significant share in the increase is made by the top 30 companies from the rating (their contribution is 43%). These companies provide about half of the increase in total milk production over the past five years,’ said Alexey Gruzdev.

The analyst stressed that due to the price environment of the last five years, the market leaders demonstrate growth rates of more than 13%.

‘This is 4 times faster than the market as a whole. This indicates that the industry continues to be attractive for investment, and the construction of complexes is underway,’ said the Head of Streda Consulting.’

‘We should not underestimate the trend of consolidation in the Russian raw milk market, when the leader (Ekoniva company) occupies 4.5% of the total milk production, and the share of the top ten companies according to the DIA TOP 100 rating of milk producers exceeds 11% of the market, this is quite a lot. If you look at the regional markets, the situation with the concentration of production in the hands of some companies is even more alarming, in the milk production market of Penza region, the share of Rusmolko is 50%, the share of Kaluga Niva (Ekoniva Group) in the regional market is 50.3%, if these enterprises have problems, it will hurt the market of the subject of the Federation and its closest neighbors,’ commented analysts of Dairy Intelligence Agency.

The rating of Dairy Intelligence Agency (DIA) top 100 milk producers according to 2019 data can be studied at the link.

In July, the DIA rating based on 2020 data will be presented.

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На прошлой неделе The DairyNews публиковало свежие данные доклада ФАО о развитии молочного рынка производство молока. Из доклада следует, что производство молока в мире будет расти примерно на 1,7% в год вплоть до 2030 года.
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