The Russian dairy products market is in yet another turmoil brought about by the lack of raw products. Even now the product choice at Moscow shops is essentially shorter, it was learned. According to reports from Saint Petersburg, Nizhny Novgorod, Novosibirsk and other major cities local shops also demonstrate shortage of milk.

The undersupplies are attributed to the processing companies fulfilling only half of their contracts. Raw milk production in Russia is traditionally on the low side in autumn and winter. Stocked up in spring and summer, milk powder used to compensate for the lack of raw milk. However, in December 2008 a technical regulation separated milk into fresh milk (made of raw milk) and milk beverages (based on dry milk), sending the demand for milk powder downhill and reducing the stocked supplies. According to the Milk Union of Russia, in January-October 2009 the production of dry whole milk and dry skimmed milk dropped by 44% and 27% respectively.

Russia used to compensate for the shortage of dry milk by importing, primarily, milk from Belarus. This year, however, the Russian Agriculture Ministry insisted on revising plans for milk purchases from Belarus, scratching out Belarusian dry milk. The Russian milk lobby hailed the decision, but overestimated its own manufacturing capacity. In addition, when faced with dry milk shortages, Russian confectioneries turned to raw milk, making the state of things even worse.

Now the Milk Union of Russia believes the situation can be mended by dry milk imports from Belarus. In late November the Russian Agriculture Ministry and the Russian Federal Service for Veterinary and Phytosanitary Surveillance even started issuing temporary permits for importing dry and concentrated milk from Belarus for the sake of calming down the market. The Milk Union believes that the volume of imports is insufficient. Moreover, the Russian Federal Service for Veterinary and Phytosanitary Surveillance backpedaled on its decision, once again claiming that Belarusian milk powder does not meet Russian sanitary rules as the reason for cutting out Belarusian milk import permits. As a result, 2,000 tonnes of Belarusian dry milk has been returned to suppliers while another 1,000 tonnes is stuck at border checkpoints.

In late November negotiations began in order to straighten things out, however, they have failed to produce anything so far. The Milk Union of Russia expects Russia First Vice Premier Viktor Zubkov to fix the situation.

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