Russia opens its dairy products market to India, but low prices make exports unviable

16 Aug 2016


Russia has loosened its stance on the minimum size of cattle population for dairies to export milk products from India, though a near halving of product prices in the international market has made export of dairy products from the country unviable.

Russia has revised its import protocol allowing exports by dairy co-operatives like Amul, but on condition that the dairies collect milk directly from producers and not from collection centres.

Russia's Federal Service for Veterinary and Phytosanitary Surveillance (FSVPS), which in April last year was insisting that dairies should have their captive cattle farms with at least 1,000 cattle to qualify for exports, has now relented, but insists that milk should be directly procured from producers and not from collection centres.

Under the earlier rule only Parag Milk Foods and Shreiber Dynamix Diaries were the only plants approved by the FSVPS to export dairy products to Russia.

''The Russian agency for ensuring food quality and safety, FSVPS, has now signed the protocol and will upload on its website the names of the dairies that meet the strict conditions laid down by it to qualify for exports,'' a Hindu BusinessLine report quoted a government official as saying.

While Russia is a huge market for dairy products, which is currently being served by Western countries, including the European Union, the easing of rules is unlikely to benefit India at a time when prices of dairy products have nearly halved, especially in the aftermath of the sanctions imposed on Russia.

Russia's annual cheese consumption is estimated at 230,000 tonnes and India has been eyeing a $40-billion market for food and agricultural items, including dairy products.

In fact, Amul has trebled its cheese production capacity to 120,000 tonnes a day from the earlier 40,000 tonnes per day, at an investment of Rs600 crore, with an eye on the Russian market.

Russia dropped the captive farm condition earlier this year, but retained the clause that exporters must be collecting milk directly from farms and not from collection centres, but this too may not help Amul much.

The Russian agency dropped the requirement based on a detailed briefing on veterinary inspection processes followed by dairies to ensure that cows are disease-free and a inspection carried out by FSVPS.

However, with current price of skimmed milk powder (SMP) of around Rs350 per kg against international prices of around Rs180 a kg, hard cheese being quoted in Indian markets at around Rs400 a kg and Rs200 a kg abroad and butter sold at $5,000 a tonne here against less than $3,000 elsewhere, export prospects for milk products are dim.

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