Russia's Dairy Market Overview

Russia plays a vital role in the global dairy market, leveraging its extensive agricultural capacities and a solid processing industry. Recent years have seen significant transformations in Russia’s dairy sector, driven by strategic investments and policy changes.

Dairy Cattle and Milk Production

In 2023, Russia had approximately 8.2 million dairy cattle, contributing to an annual milk production of about 31 million tons. These figures underscore Russia's robust dairy farming infrastructure and capacity.

Milk Processing and Cheese Production

Russia boasts a well-developed processing industry that processes about 21 million tons of milk annually. Cheese production is a significant part of this industry, with an annual output of approximately 1.1 million tons. Additionally, Russia produces about 1.6 million tons of milk powder and whey each year, highlighting its proficiency in diverse dairy processing activities.

Key Dairy Enterprises

Major Dairy Plants:

• Moscow Dairy Plant
• St. Petersburg Dairy Combine
• Udmurt Dairy Complex
• Krasnodar Milk Processing Plant
• Irkutsk Dairy Plant

Leading Dairy Farms:

• Miratorg Agribusiness Holding
• Efko Group
• Rusmolco (Russian Milk Company)
• Eridan Group
• Agrocomplex named after N.I. Tkachev

Export and Import of Dairy Products

In 2023, Russia exported approximately 800,000 tons of dairy products while importing around 1.2 million tons. This trade activity illustrates Russia’s expanding influence and demand in the dairy sector, despite some domestic supply-demand imbalances.

Significant Events in the Dairy Industry

• Danone's Exit: On March 22, 2024, Danone exited the Russian market following regulatory approval to sell its assets, leading to an estimated loss of €1.2 billion, reshaping the competitive landscape in Russia's dairy industry.
• TH Group's Entry: Vietnamese company TH Group announced plans to establish a dairy plant in Russia with a processing capacity of 1.5 thousand tons daily, representing a $204 million investment in the Russian Far East.
• Unilever Acquisition Approval: Russian FAS approved the acquisition of Unilever Rus by a local company for approximately $340-450 million, modifying the competitive dynamics in the sector.
• EkoNiva's Expansion: EkoNiva expanded its products to 70 regions in Russia, indicating a broader distribution network.
• Increase in Imports: There was an 18% increase in butter imports from Kyrgyzstan, alongside stable butter price fluctuations.
• Domestic Consumption: Domestic dairy product consumption rose by 6%, with raw milk production growing at a slower rate of 2.5% in early 2024, indicating a potential future shortage.
• Global Trade Engagement: Strategic collaborations with Kazakhstan continue to address agricultural challenges, and Russia has begun importing butter from the UAE, showcasing global trade engagement.
• Whey Exports: Russia is enhancing whey exports, with Kazakhstan as the largest importer.
• Food Embargo Extension: The Russian government approved a resolution extending the food embargo until the end of 2026.
• Price Increases: According to Rosstat, butter prices in Russia increased by 5.04% in November 2024, marking the most significant increase among dairy products.
• Conflict Impact: Russian drone strikes damaged a Ukrainian dairy farm, killing 11 cows.
• Export Growth: Russia’s dairy exports surged 20% year-on-year in the first 11 months of 2024, reaching a value of $370 million.
• Sovecon Forecast: Sovecon, a prominent agricultural consultancy, reduced its forecast for Russia’s 2025 wheat production.
• McDonald's Trademark Activity: McDonald's reportedly registered over 50 new trademarks in Russia, fueling speculation about a potential return.
• Ice Cream Exports: Russia’s ice cream exports reached $55 million from January to November 2024, a 15% increase compared to the previous year.
• Kumis Consumption: Russians increased kumis consumption by 67% in 2024.
• Sberbank Withdrawal: Sberbank withdrew from the subsidized lending program for Russia's agricultural sector.
• Bilateral Agricultural Cooperation: Oksana Lut, Russia's Deputy Minister of Agriculture, and Gholamreza Noori Ghezeljeh, Iran's Deputy Minister of Agriculture, met to explore opportunities for enhancing bilateral cooperation.
• Uruguay's Market Engagement: Russia emerged as a key market for Uruguay's dairy exports, showcasing Uruguay's ability to expand its international reach.

In summary, Russia's dairy sector experienced substantial challenges in 2024, with declining cattle numbers and slowing milk production causing a supply shortage and resulting in sharp price increases for dairy products. However, the sector remains dynamically engaged in global trade and domestic market adaptation. Russia showed the most significant increase in demand, making it the primary driver of the record-breaking export figures.

Modified: 2025/02/05

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