Record Prices in Russia’s Dairy Market: Supply Shortages and Declining Cattle Numbers Drive Price Surge
Decline in Cattle Numbers and Slower Production Growth
The country’s cattle population dropped by 3–3.5% in 2024, equivalent to 250,000–300,000 head of cattle, with about half of the decline occurring in the corporate sector. Despite this, improved productivity partially offset the loss, with average milk yields per cow in agricultural enterprises rising by 5.7% to a record 8,600 kilograms.
However, overall raw milk production grew by only 0.6% in 2024, reaching 34 million tons, a significant slowdown from the 2.5% growth recorded the previous year.
High Demand for Dairy Fats
The second half of 2024 saw intensified competition for dairy fat, particularly among ice cream and cream producers. Ice cream production surged by 18%, liquid cream by 15%, and cheese by 6%. In contrast, butter production dropped by 2%, exacerbating the supply shortage and driving up prices.
Supply Shortages and Rising Prices
Stocks of key dairy products hit their lowest levels in years, fueling a 16.5% increase in raw milk procurement prices, compared to a 6% decline in 2023.
The price of butter (72.5% fat) rose 1.7 times, reaching 900 rubles per kilogram. Cheese prices began climbing in the fall, increasing by 4–8% year-over-year. Prices for skimmed milk powder rose by 7.5% monthly, while whey powder jumped by 10% per month.
Outlook for 2025
Analysts predict that price peaks will be reached by spring 2025. The market is expected to remain at high levels next year, further straining both the dairy processing industry and consumers.
With supply shortages and rising costs likely to persist, industry stakeholders may require additional government support to navigate these challenges.
The year ahead will test Russia’s dairy sector as it grapples with balancing supply, production, and consumer affordability amidst unprecedented pressures.
