OREANDA-NEWS. November 12, 2013. A Working Group of FAS Expert Council on Agro-Industrial Complex discussed the problems that caused such situation on the market at a meeting organized at the Federal Antimonopoly Service (FAS Russia) with representatives of the Ministry of Agriculture, Rosselkhoznadzor, Pospotrebnadzor, MILK UNION and business community.

The meeting was chaired by the Head of FAS Department for Control over Chemical Industry and Agro-Industrial Complex, Anna Mirochinenko.

As pointed out by participants, reduction of milking herd livestock due to increased forage prices, resulted in decreased production of raw materials and, as a consequence, growth of prices for it.

In comparison with 2013, prices for raw materials in some regions increased by over 30%, which inevitably affects the costs of dairy products and demand for them.

According to the data quoted by participants, the market has experienced stagnation in the past two months: the increase of consumption of dairy products in that period was 0%.

One of the factors adversely affecting the market of raw milk is the existing system of subsidies per 1 liter of sold raw milk, the size of which depends on its quality characteristics (grades, fat and protein content). The absence of a system of objective evaluation whether the products meet the established criteria does not make the subsidies system transparent, which forms preconditions for discriminating market participants, product counterfeiting and, as a consequence, unauthorized use of budgetary funds.

The Working Group also discussed possible measures aimed at stabilizing prices on the raw milk market.

“One of the steps towards stabilizing prices on the domestic raw milk market can be a system of intervention purchases, which is already widely in place aboard, for instance, in the European Union”, said Anna Mirochinenko.

Apart from the decreased milk production, the Working Group also discussed cooperation between dairy products suppliers with trading networks, and unfair competition associated with failures to comply with technical regulations for dairy products.