March 7, 2012

In order to avoid undermining Russia's dairy market with low-cost products, Belarus will suspend dry milk supplies to Russia from the second quarter of 2012, the Belarusian Agriculture and Food Ministry said late on Tuesday (Mar 6).

"Deliveries of whole milk powder and whey powder from Belarus to Russia will be suspended from the second quarter [of the year] according to the balances for milk and milk products," the ministry quoted its head Mikhail Rusoy in a statement as saying.

Russia's National Dairy Producers Union sent an open letter to the agricultural ministries of the two countries in late February asking them to take measures to prevent the Russian dairy market from overheating.

"The average end-price for raw milk in Russia stood at RUB15-16 (US$0.51-0.55) per kilogramme as of 2012, while in Belarus the price does not exceed RUB11 (US$0.37) per kilogramme, which would constitute an unprecedented competitive advantage for Belarusian dairy products within the common market of the Customs Union," the union said in a letter.

The union also warned in the letter that dumping by Belarusian milk producers might cause a drastic decline in the price paid for dry milk in Russia.

Belarus will undertake not to reduce recommended prices on milk products for the Russian market in 2012, Rusoy said.

The two parties will hold talks once every two weeks to monitor supply-and-demand levels of milk products in order to minimise the impact on the Russian dairy market.