“Growth Reserves Exhausted”: What Awaits Russian Livestock Industry in 2026
Stagnation and Reduction in the Farming Sector
According to Lyudmila Manitskaya, Director of the Russian Dairy Union, the key indicators of the industry in 2025 did not show sustainable growth. The cattle population continued to decline, and total milk production increased by only 0.3%.
The most alarming trend was the reduction in production within the farming sector, which has been the main growth driver for the past 15 years. For the first time in a long period, milk production in farms decreased by 4.3%. Growth in large agricultural organizations (+3.5%) only partially compensated for the decline in small-scale farming.
Experts note that the industry is increasingly concentrating in the hands of large agribusinesses, while small and medium-sized farms face exhaustion of investment and operational resources.
Overproduction of Milk and Decline in Purchase Prices
Market participants call the current combination of increased raw milk supply and decreased purchase prices a paradox. Farmers report a decline in milk prices during the autumn-winter period, an unusual time for the industry.
According to farmers, the decline in purchase prices is due to an excess of quality products and a slowdown in consumer demand. However, dairy products on retail shelves have not yet shown a comparable price reduction.
Artem Belov, head of Soyuzmoloko, explains that several factors are putting pressure on the market: the recovery of demand is slower than expected after a sharp rise in raw milk prices in 2024 (over 30%), commercial milk supply continues to grow by about 2%, and the strengthening of the ruble has led to a reduction in exports and an increase in imports. As a result, dairy product stocks are exerting downward pressure on purchase prices.
Shift of Interest to Meat Livestock
Due to declining profitability in dairy production, some farmers are considering shifting to meat production. Beef, unlike milk, maintains higher price attractiveness, making cattle fattening an alternative for farms with a feed base.
At the same time, the pig farming segment remains tense. Despite outbreaks of African swine fever, purchase prices for pork, according to producers, have fallen to the level of production costs. Rising costs for feed, electricity, and personnel are not compensated by revenues, while retail prices remain high.
Cost Pressure and Labor Shortages
An additional risk factor remains the increase in labor costs. Farm owners are forced to raise wages to retain workers, competing with rotational employment and the urban labor market. This further increases the production cost.
Moreover, farmers point to increasing tax burdens and infrastructure constraints, including a lack of access to gas, which hampers local processing development and deprives farms of the opportunity to earn additional margins.
2026 Forecast: Price Increases and Further Concentration
According to Lyudmila Manitskaya, in 2026, the industry is likely to continue along an inertia-driven scenario. Consumer prices for key dairy products are expected to rise in the range of 9-12%, while purchase prices will grow more moderately due to persistent stocks and limited export opportunities.
The leading regions in milk production — Tatarstan, Krasnodar Krai, Bashkortostan, Udmurtia, and Altai Krai — will maintain their key role in the industry. At the same time, in remote regions, especially in Siberia and the Far East, further declines in local production are expected, which will increase dependence on supplies from central regions and lead to higher retail prices.
Experts believe the general trend for most regions will be the reduction of small-scale farming — personal plots and small farms — against the backdrop of urbanization and population outflow. This will lead to further concentration of production in large complexes with higher productivity, altering the socio-economic landscape of rural areas.
