In 2008 Russia was the world’s largest buyer but in the following year was knocked off its number one spot when China started to import vast quantities of milk powder. Russia’s total dairy imports in 2013 were about a third of the volume imported by China.
Russia is a large milk producer in its own right, but has not been able to attain self-sufficiency levels. It produces more milk than NZ does but about a third isn’t processed as it is either consumed onfarm or sold locally.
When Russia joined the World Trade Organisation it was required to eliminate subsidises for fertiliser and fuel. Although they still exist for milk production and importing dairy stock, these have been insufficient to combat rising costs of production, such as higher feed costs.
Farm profits are generally declining and so is Russia’s milk production.
But the country’s need for imported dairy products is growing. NZ has traditionally been Russia’s largest supplier of butter, providing up to half its imports. But in 2013 NZ experienced difficulties getting product into this market and Uruguay became Russia’s largest supplier.
Customs officials regularly block imports for reasons that are not always logical or consistent. In the past year Russia restricted imports of milk and dairy products from some German, Lithuanian, Spanish and NZ exporters, including Fonterra, because of perceived violations of Russian veterinary and sanitary requirements detected during routine monitoring.
While NZ is still Russia’s second largest supplier of butter, Russia is only NZ’s sixth most important butter market, ranking behind Belgium, China, Iran, Egypt, and Australia.
Russia ranks even lower in terms of overall importance as a market for NZ dairy products, standing at number 24 last year when measured either by volume or value.
Last year Russia was a $115 million market for NZ dairy products while China was worth nearly $4.5 billion.
Russia usually sources dairy products other than butter from former Russian states and from Europe. In 2013, Ukraine was the single largest supplier of cheese to Russia, with European nations supplying virtually all the rest of Russia’s cheese requirements.
