Russia's Dairy Market: A Comprehensive Overview

Russia continues to be a vital force in the global dairy market, leveraging its extensive agricultural lands and a solid processing industry to maintain its competitive edge. The dairy sector in Russia has witnessed significant transformations in recent years, driven by strategic investments and shifts in policy.

Dairy Cattle and Milk Production

In 2023, Russia was home to approximately 8.2 million dairy cattle, contributing to an impressive annual milk production of around 31 million tons. These figures highlight Russia's robust dairy farming infrastructure and capacity to support a growing dairy industry.

Milk Processing and Cheese Production

Russia boasts a well-developed milk processing industry, with about 21 million tons processed annually. Cheese production is a significant component, with an annual output of approximately 1.1 million tons. Furthermore, the country produces about 1.6 million tons of milk powder and whey each year, underlining 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 imports stood at around 1.2 million tons. This trade activity reflects Russia's expanding influence and demand in the dairy sector, although there are some domestic supply-demand imbalances.

Significant Events in the Dairy Industry

• Danone's Exit: On March 22, 2024, Danone exited the Russian market after receiving regulatory approval to sell its assets, incurring an estimated loss of €1.2 billion. This move has reshaped the competitive landscape in Russia's dairy industry.
• TH Group's Entry: The Vietnamese company TH Group announced plans to establish a dairy plant in Russia, marking a $204 million investment in the Russian Far East.
• Unilever Acquisition Approval: The 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 product reach to 70 regions in Russia, reflecting 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%, but raw milk production only grew at a rate of 2.5% in early 2024, indicating a potential future shortage.
• Global Trade Engagement: Strategic collaborations with Kazakhstan continue, and Russia has started importing butter from the UAE.
• Whey Exports: Russia is enhancing whey exports, with Kazakhstan being the largest importer.
• Food Embargo Extension: The Russian government extended the food embargo until the end of 2026.
• Price Increases: 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.
• Export Growth: Dairy exports surged 20% year-on-year in the first 11 months of 2024, reaching a value of $370 million.
• Sovecon Forecast: Sovecon reduced its forecast for Russia’s 2025 wheat production.
• McDonald's Trademark Activity: Registered over 50 new trademarks in Russia.
• Ice Cream Exports: Ice cream exports reached $55 million from January to November 2024, a 15% increase.
• Kumis Consumption: Kumis consumption increased by 67% in 2024.
• Sberbank Withdrawal: Sberbank withdrew from a subsidized lending program for agriculture.
• Bilateral Agricultural Cooperation: Meetings with Iran to enhance cooperation.
• Uruguay's Market Engagement: Russia as a key market for Uruguay’s dairy exports.

In summary, Russia's dairy sector faced significant challenges in 2024, with declining cattle numbers and slowing milk production causing a supply shortage and leading to sharp price increases for dairy products. However, the sector remains actively engaged in global trade and has adapted to the domestic market's demands. Russia's dairy exports soared, driven by rising consumer demand. Meanwhile, the cheese industry continues to expand, playing a critical role in replacing imported varieties amidst ongoing geopolitical and economic shifts.

Modified: 2025/03/10

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