Although the quality of Russia’s dairy herd continues to develop as a result of government of Russia (GOR) support for herd improvement, high feed costs are expected to impede growth in 2013.

Government Support mainly consists of subsidies for pedigree cattle purchases and modernization of production (e.g., compensation for infrastructural improvements to farms.

Milk production in 2012 has been supported by strong milk prices throughout the year, and these high prices are likely to continue through next year.

Cheese production is forecast to increase, while butter production is expected to slip due to lower anticipated profits when compared to other dairy products (given competition with imported cream butters, domestic alternative butter products, and margarine being represented as less expensive butter).

Production of milk powders are expected to remain flat (WMP) or increase slightly (NFDM) in correlation with increased fluid milk and cheese production, as well as increased utilization.