Raw milk prices fall 20–30% across southern Russia as farms weigh herd cuts
Farmgate raw milk prices have dropped 20–30% in several southern Russian regions, while some processors are reducing collections. Smaller farms face the greatest pressure as feed costs rise and alternative sales channels remain limited.
Farmgate prices retreat
Farmgate prices for raw milk have fallen by 20–30% in several regions of southern Russia over recent months, leaving some producers to choose between operating at minimal profitability and reducing their herds, Kommersant reported. The deterioration follows a sharp reversal in market conditions: at the beginning of the year, processors were warning of a shortage of raw material and encouraging farms to increase production, but by summer some farmers were discussing herd reductions and smaller operators were considering leaving dairy farming altogether.
The pressure extends beyond lower prices. Sergey Kolesnikov, chairman of the AKKOR Council in Stavropol Territory, told Kommersant that processors sometimes stop collecting milk, citing occupied capacity, vehicle breakdowns or unavailable drivers. Small farms and household producers are especially exposed because they have few alternative sales channels. Kolesnikov said rebuilding a high-quality herd after liquidation can require five to eight years, while farms protected by long-term supply agreements are better able to withstand price fluctuations.
Feed costs compound the squeeze
Individual farm accounts illustrate the margin compression. Farmer Yevgeny Prasolov said his business was receiving RUB39 per litre several months ago and now obtains about RUB30, while household producers receive roughly RUB27. At the same time, his monthly spending on feed additives has risen from about RUB100,000 to RUB220,000 with the herd unchanged. He described profitability as negative and said the farm must decide whether to cut cattle numbers or continue operating at a loss.
Larger operations are also under strain. Sergey Toloknev, head of the Toloknevo farm, said its milk price fell gradually over four to five months, from RUB52 per litre last year to approximately RUB38. The business is maintaining output, but its dairy operation is now breaking even and is being supported by crop production. Smaller farmer Vitaly Podoprigora receives only RUB24–25 per litre and is considering closing his dairy activity. His farm has 11 milking cows, and a bale of hay weighing about 35 kilograms costs RUB150–200, before grain, other expenses and labour are included.
Processors and producers offer different explanations
Market participants have not reached a common explanation for the downturn. Producers have raised questions about changes in processing, the use of cheaper raw material and weak competition among buyers, but Kommersant reported that they lack confirmed evidence for a single cause. Prasolov said buyers attribute reduced demand for milk to weaker sales of processed products, particularly cheeses made in Adygea and sold on the Black Sea coast. In that account, lower cheese sales have reduced processors’ need for previous milk volumes.
Farmers also point to a widening disconnect between farmgate and retail markets. Kolesnikov said dairy products on store shelves have not become cheaper despite processors obtaining less expensive milk. Prasolov similarly noted that retail prices were rising even as his farmgate price dropped by more than RUB10 within three to four months. For producers, the immediate risks are lower investment, herd liquidation and the loss of dairy income in rural communities. Long-term contracts may provide some protection, but farms without secure collection arrangements remain vulnerable to both further price cuts and rejected deliveries.
