January 22, 2013

 

Foreign farm groups boost Russian dairy production

 

 

Foreign farm groups are boosting dairy production in a Russian market which offers "excellent conditions" for growth to meet the output void which leaves the country largely dependent on imports.

 

Alpcot Agro, the Swedish-listed farming group with operations in Russia and Ukraine, said on Monday (Jan 14) that its Russian dairy production had risen by 31% last year to an average of 42.1 tonnes per day.

 

The increase reflected "improvements in the genetic make-up" of the group's dairy herd, "as well as its general quality and health", with milk output far exceeding a rise in dairy cows, which increased 8.7% to 3,250 head over 2012.

 

Average output per cow was, at 464 litres per month, 15% higher in the October-December quarter as in the same period of 2011. Prices the group achieved for milk products were 15% higher at the end of the 2012 than a year before, "due to the higher fat and protein content in the milk, which commands a higher price".

 

However, dairy prices broadly in Russia have been firm, supported by demand which has kept the country as a significant importer, largely of butter and cheese, but of notable quantities of skim milk powder too.

 

Ekosem-Agrar, the German-based company which owns Russia's Ekoniva Group farming operation, forecast further rises to come, giving it a "positive" outlook for 2013.

 

"The Russian milk market remains highly dependent on imports. Based on contracts already closed for 2013, the company anticipates an average milk price of approximately EUR0.44 (US$0.59) per litre", some 10% higher than the average price obtained last year. The market will therefore provide excellent conditions for further growth," Ekosem said.

 

Russia's dairy market has proved a popular draw for foreign investors seeking growth absent in Western Europe, with companies such as Danone, Olam International and PepsiCo sealing dairy tie-ups in the country.

 

Ekosem-Agrar said its own Russian operations raised milk output by 61% to 84.1 million litres, enabling it to take second rank among the country's producers. Per day, output averaged 230 tonnes, up from 137 tonnes in 2011, lifted by an increase in cow productivity to 20.55 litres per day from 18.29 litres over the year, and by herd growth.

 

"The improvements we have made in milk production efficiency and the on-target expansion of our dairy cow herd mean that 2012 was again a record year for us," Stefan Dürr, the Ekosem managing partner, and majority shareholder, said.

 

Alpcot Agro shares rose 3.2% to SEK6.50 (US$1) in morning deals, extending a recovery from an all-time low of EUR4.60 (US$0.70) reached last month.