Lack of equipment and technology in Russia’s dairy sector

Several market players have expressed concerns that the Russian dairy industry could experience big problems as sourcing equipment in some segments has become a tall order due to Western sanctions, according to Russian news outlet, Dairy News.

Mikhail Mishenko, general director of the Dairy Intelligence Agency, forecasted a decline in investment activity in the dairy industry due to a lack of Western technologies, despite a significant number of new projects that Russian dairy companies have in place.

“This [lack of equipment] applies primarily to the dairy farming construction segment. We are definitely facing difficulties with equipment for establishing milking parlours because the world’s largest equipment manufacturers have suspended the supply of their products to Russia,” Mishenko said.

Alternative options

Things are looking better in the milk processing segment. Some investors could be forced to buy used equipment to launch new projects at farms that had suspended operations, he said, adding that there is a chance of sourcing such equipment in a relatively good condition.

“In addition, there are schemes for importing equipment through the Customs Union countries [Belarus and Kazakhstan]. There is also an opportunity to purchase equipment from China and Turkey. Nevertheless, a decline in new investments in the dairy industry in the near future is inevitable,” Mishenko said.

Tricky logistics

Agrosila Group, a major Russian dairy manufacturer, confirmed that due to sanction pressure, it has faced difficulties with the supply of components and spare parts for imported equipment and packaging material for some of its projects. The company mentioned the increased time and costs for the goods coming into Russia.

“Before [sanctions], it took 30 days to deliver packaging to Russia. Now, it is 45-50 days,” he said.

Political uncertainty

Alexey Demyanov, CEO of Cheese Province, a major Russian cheese manufacturer, said that his company had plans to expand its range but they were postponed indefinitely due to multiple reasons.

“One of them was the political uncertainty in the country. However, in the future, we intend to expand production facilities to master the production of new cheeses, as well as to expand storage facilities. Some other market participants also suspended the implementation of new investment projects, mainly because of [military] operations in Ukraine,” Demyanov said.