The Russian dairy industry is on the rise, with forecasts indicating a boost in exports for 2024. Despite challenges such as logistics and financial issues due to Western sanctions, the industry is showing significant growth. In 2023, Russian dairy exports surged by 15-18%, with a shift in the export structure towards non-CIS countries and exchange categories like milk powder and whey. This trend is expected to continue, with a 5% increase in raw milk production in the first 2 months of 2024.
## Sanctions
One of the main concerns facing the Russian dairy industry is the impact of sanctions on logistics and financial transactions. Issues with interbank transactions, especially in countries like UAE, Turkey, and China, have made it difficult for Russian businesses to operate smoothly. Turkish banks, in particular, have started closing Russian corporate accounts in response to threats of secondary sanctions from the United States, leading to a decline in Turkish exports to Russia.
Russian firms, including dairy exporters, have traditionally used banks in the Middle East and Asia for payment collection. However, recent compliance measures and increased scrutiny from these banks have created challenges, causing delays and disruptions in payment processing. Despite these challenges, Soyuzmoloko, the Russian Union of Dairy Industry, remains optimistic about the potential for growth in new markets to drive Russian dairy exports.
The main obstacles facing the dairy sector include rising production costs and key interest rates. Nevertheless, Soyuzmoloko anticipates that increased sales to new markets will help boost Russian dairy exports in 2024. For example, the organisation predicts a surge in dry milk and whey exports to Nigeria.
Overall, the Russian dairy industry is navigating through various challenges to capitalise on the growing demand for dairy products globally. By adapting to changing market conditions and exploring new export opportunities, Russian dairy exporters are positioning themselves for success in the international market. If they can overcome the hurdles presented by sanctions and logistics issues, the industry has the potential to further expand its reach and make a significant impact on the global dairy market scene.
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