in the world erupted global trade war, Russia and Belarus decided to war locally. The reason of discord between the fraternal peoples became milk — in late February, the Rosselkhoznadzor announced about restricting the import of Belarusian dairy products, ostensibly for health code violations. The wrath of Alexander Lukashenko and dairy crisis in Russia — in the material “”.

Limitations of the Rosselkhoznadzor touch dry and pasteurized milk, which are willing to buy the raw materials to Russian plants, milk in consumer packaging (i.e. the one that is on the shelves in the shops) under embargo misses. Initially, to impose an embargo on Belarusian milk was planned on February 28, but the deadline was postponed twice — first on March 6 and after March 15. While the parties try to settle disagreements at the negotiating table, the Russian molokoobrazovanie suffer from falling prices.

a blow to his beloved brainchild — agriculture — President, Alexander Lukashenko, reacted very sharply. The milk was “a blatant political tool,” said angered the Belarusian leader promised that “the unanswered things will remain.” “Because I’m special services inform that imported from New Zealand or somewhere dry milk (that’s their business), there was a surplus and they start to hold us until sell the milk at high prices. Therefore, they do not like cheap milk,” noted it.

the Russian side accuses Belarus of regular violations of the standards of quality of the supplied milk and dairy products. The head of the Rosselkhoznadzor Sergey Dankvert argues that it happens due to adulterated supplies of milk from Belarus to Russia due to the lack of a unified automated system of accounting of the ward products. According to him, the Belarusian colleagues refuse to use the Russian system, preferring it to the old method — paper check logs.

moreover, Dankvert says that Belarus and Kyrgyzstan, are hubs of shipment to the European sanctions of dairy products. The head of the Supervisory Department said that Europe is trying to sell about 380 thousand tons of its inventory of the Fund (the volumes, which government bought from the manufacturers to reduce their losses including Russian predamage). This dairy products nearing the end of shelf life, so it is very cheap, a Russian milk producer to compete with such products becomes difficult. Rosselkhoznadzor, according to Dankvert, “just tidying up in the market.”

At the beginning of the year, Russian regions one after another began to complain of an unprecedented reduction of purchasing prices for milk from agricultural producers. In the Altai region, the price of milk fell compared to the previous year by seven rubles to 20 rubles per liter. Milk of first grade in the Novosibirsk region in February fell to 22.4 rubles. In early March, the purchase price in the Perm region fell to 21.4 ruble, while last year it reached 24 rubles. In Tatarstan milk in January fell by 6-8 rubles to 22 rubles per liter.

reducing the cost of milk in the winter period is really a rarity, typically the price reduction comes closer to the summer, in the so-called season of “big milk.” Now prices are falling because of the big volumes of imported milk powder in the market, according to regions. Because it was cheaper to buy it the mills and used as raw material for the production of reconstituted milk. “All this puts pressure on the dairy market and makes our lives on this market is troubled,” — stated acting Minister of agriculture and food of the Udmurt Republic Olga Abramova.

At Federal level this problem was taken, the authorities in Tatarstan — February 16 the head of the Republic Rustam Minnikhanov told Prime Minister Dmitry Medvedev about the dominance of imports. Later the state Council of Tatarstan asked the head of the government to restrict the import of foreign products and “improve the efficiency of the identification of counterfeit, substandard milk products” — otherwise, milk production will lose profitability, claimed regional authorities.

Problems in the regions do have the purchase price reduced, noted the Russian National Union of milk producers (Soyuzmoloko). Traditionally, during the year in the dairy market there are sharp fluctuations in prices, says Director of public relations and government agencies Soyuzmoloko Maria Rebit. “Winter milk small, and it is expensive, and in the summer a lot, its cost is reduced, and producers operate at a loss. The amplitude may be 20-30 percent,” she said. But this year, there was a completely different situation.

According to Rosstat, in 2017 in the country produced 31.1 million tons of raw milk, which is 1.2 per cent, or 362 thousand tons more than the year before. Overall, in recent years, the production of marketable milk and finished products is growing at a steady rate of 2-3 percent per year. The sales volumes are directly affected by the drop in consumer demand — producers do not have time to sell stocks. “In addition, the increased volume of cheap imports from Belarus and third countries”, — recognize in Soyuzmoloko.

“Yes, indeed in the dairy market there is now a crisis of overproduction, the situation is dire. But nothing unusual or tragic about it,” — said the Director of the consulting Agency “Sovekon” Andrey Sizov. Agro-industrial complex lives in a market environment: supply has increased, accordingly, prices are decreasing, he said. The difficult situation on the Russian market of milk arose from the demand reduction, the expert believes. “If we look at retail prices, we see that dairy products in recent years are the leaders in terms of growth compared to other categories,” says Sizov. Therefore, the Russians, the money of which does not increase, reduce the consumption of “milk”, he said.

According to Rosstat, the prices of milk and dairy products for 2017 rose 8.5%, 2016 — 9.5%. Parallel to the real disposable cash incomes of Russians last year decreased by 1.7 percent. This was the fourth year fall: in the years 2014-2016 revenues fell by 0.7, 3.2 and 5.8 percent, respectively.

Sizov sure that from-for falling of incomes of the Russians have changed their consumer behavior: earlier, citizens were choosing more affordable products in different categories, it now raises the question of the priority need categories — either cheese or meat — you can buy both products at once, many just can’t afford it. Misoprostil, according to the Director “Sovekon”, adapted to the crisis better than their dairy counterparts. The fall in demand due to the growth in demand in the dairy market and support in Soyuzmoloko. “At the moment, with declining demand due to the fall in the purchasing power of the population with a surplus production and record stocks,” notes Maria Rebit.

agree With them Director, Center for agrofood policy, Ranepa by Natalia shagaida: “Retail sale of food in Russia a little revived after falling in the period from August 2014 to July 2017, but still has not grown even to the level of 2015”. It also draws attention to the fact that the problem often lies in the low competitiveness of Russian products — manufacturers (which are often state-owned) are not interested in reducing costs, they are only interested in the volume of production. “Never heard from high rostrums that even the statement of the problem: why do we still expensive? It’s not only agriculture concerns. Questions how to make Russian products and services competitive, and most importantly, how to ensure the growth of incomes of the population, in my opinion, the main issues of economic policy,” shagaida said.

Belarus account about 79 percent of total imports of dairy products in Russia and 92 percent of milk supplies and cream. In absolute terms this is almost 300 thousand tons of milk by the end of 2017. Ministry of agriculture noted twofold increase in inventory of milk powder in the country compared to last year and encouraged the bakers to increase purchases of domestic raw materials “at least twice”. The Ministry of agriculture did not respond to a request “of the” about the state of the dairy market, PepsiCo, which owns more than 40 enterprises producing dairy products in Russia, declined to comment.

Despite the alarming numbers, Soyuzmoloko careful in assessing the impact of imports on the dairy crisis in Russia. “The Union does not have data and results of studies confirming violations by Belarus, however, sure that the dialogue within the Eurasian economic Union will help to solve this problem,” said in a statement the Association.

the Russian Union of dairy industry enterprises (Dairy Union of Russia) expressed more clearly: “the Closure of supply of the Republic of Belarus in Russia is connected with the containment of domestic prices for raw materials from further fall.” The milk Union also calls the falling incomes cause of the crisis in the market.

Temporary limitation of imports from Belarus will reduce stocks of dry milk and butter in the country and will help the Russian manufacturers, said Sizov. It is unlikely that this measure will become permanent because of the political importance of the partnership between Moscow and Minsk, and special attention Lukashenko to agriculture. “If you still will be — we will see probably the significant growth of prices for dairy products, which will become even less affordable for Russian consumers”, — the expert believes. But fundamentally milky “embargo” the situation in the industry will not change, he said.

To overcome the crisis Soyuzmoloko proposes to use tool procurement and commodity interventions. “To solve the problem of price volatility, it is necessary to take comprehensive measures, including the interventions in the grain market to smooth fluctuations in long-term cycles in the dairy industry will help solve the problem of short-term cycles,” — said the representative of the Association Maria Rebit. In Soyuzmoloko result data of the Ministry of agriculture about the fact that the dairy intervention will cost the state one billion rubles annually.

Director of “Sovekon” doubts about the necessity of purchasing interventions. “This is an unexpected, expensive and archaic in principle. It is assumed that we have a temporary crisis, the government buys something, will take away from the market and then sell on it back when prices rise. And if you do not grow up? How much time will have to be store purchased and who will pay for it?” he says. Due to government intervention the solution to the problems once again will be postponed for the future. “Yes, prices have fallen, inefficient producers leave the market to remain efficient, breathe easy. In the past few years, the industry itself felt very good, the safety margin is”, — said Sizov.

the Rosselkhoznadzor moved the imposition of restrictions on the import of Belarusian products on March 15. In 2017, Moscow and Minsk have argued for dairy products, then the parties managed to negotiate the deliveries were resumed.