Food Producers Report Increased Costs for Palm Oil-Based Raw Materials

Managers from two dairy producers, a representative of a confectionery company, and the head of a company producing products with milk fat substitutes (MFS) reported an increase in the cost of palm oil-based raw materials. According to one of the dairy producers, palm oil now costs 200–220 rubles per kilogram, up from approximately 140 rubles three weeks ago. The price increase is around 43–57%, and prices for MFS have risen by 50–60%.

The wholesale prices of Russian MFS producers based on palm oil have increased by more than one and a half times in the last month, according to Andrey Dakhnovich, co-owner of the Foodland Group. Artem Belov, CEO of Soyuzmoloko, confirmed that the cost of MFS has been rising "quite dynamically" in the last month. Mikhail Maltsev, Executive Director of the Oil and Fat Union, linked the price increase to higher logistics costs and the strengthening of the dollar, noting that previously the raw material prices were rising in line with global palm oil prices.

According to Dakhnovich, supply issues in Russia's Black Sea ports, through which raw materials from Indonesia and Malaysia are imported, have been a factor. On July 30, the Southern Transport Prosecutor's Office reported a drone attack on the port of Taman and a resulting fire. On August 6, the company "Efko" announced that its vegetable oil transshipment terminal had been halted to assess damage and conduct repairs. The company began exploring alternative routes for imports and exports; it has not announced the resumption of terminal operations.

The main volume of palm oil imported into Russia passes through Taman, and "Efko" is considered the largest importer of this product. The company also produces food industry ingredients, including milk fat substitutes, confectionery fats for chocolate and candies, and cocoa butter equivalents. On June 13, the governor of the Krasnodar region, Veniamin Kondratyev, reported a fire at the sea terminal in the Temryuk district following the fall of drone debris; the terminal's name was not specified at that time. "Efko" did not respond to Shopper's inquiry.

Market participants have differing opinions on the existence of a shortage. A manager from a dairy producer mentioned a shortage of palm oil. Maltsev believes that there is no actual shortage, but stocks of specialized fats and margarines have decreased. According to him, some shipments are being redirected from Taman to Northwestern ports, including St. Petersburg, and previously accumulated stocks have been sold. He described the situation as "planned and operational" and stated that the first batches of palm oil should arrive at Northwestern ports in about a week. A representative of a dairy producer expressed concern that St. Petersburg's capacity, which is more focused on container shipments, might be insufficient.

From January to July, palm oil imports to Russia decreased by 22% to 491,000 tons, according to the Oil and Fat Union's data. A major Russian confectionery manufacturer partially offset the price increase by using suppliers from other countries with processing facilities. There are also suppliers in Russia who are not experiencing delivery issues. According to NTech, sales of MFS products in retail chains decreased by 4% in physical terms in the first half of the year but increased by 7% in monetary terms. This type of product accounted for 1% of all dairy product sales in physical terms and 2% in monetary terms.

The increase in palm oil costs primarily affects margarines and spreads, said Dakhnovich. According to him, the production cost of Foodland's cheese products with MFS increased by approximately 10% over the month. In August, companies traded previously produced goods and almost did not produce new batches. Dakhnovich noted that the group's main market consists of natural cheeses made only from milk raw materials.

Belov reported a noticeable recovery in wholesale cream prices over the last two to three weeks. He also linked the prospect of declining stocks and recovering butter prices to the market situation, noting that in 2026, stocks of butter and cheese reached record levels and put pressure on prices. MFS products occupy about 20% of the cheese market; consumers choose them partly due to their lower price compared to products made solely from milk.

The production of MFS products has been declining since the end of 2025, Belov said. As of January 1, 2026, milk-containing products with MFS were excluded from the list of goods subject to the reduced VAT rate of 10%. They are now subject to the base rate of 22%. According to Belov, this has increased the risk of liability for producing products using MFS without proper labeling in the composition. The production of such products has decreased, but they are still present in the market.