Unhappy milkmen: producers complained about the reduction of state support
Large milk producers saw serious risks for the industry and warned of a 15-20% drop in production profitability in the event of a reduction in government subsidies. And this may affect the end user, they told Izvestia. The Ministry of Agriculture has developed new rules for the provision of assistance, the money will be redistributed to other types of assistance to farmers, including breeding centers and the development of new investment projects. The ministry noted that the dairy industry remains one of the most supported in the Russian agro-industrial complex and the set of measures for producers is quite wide. How the industry sees a solution to the situation is described in the Izvestia article.
Why did we have to reduce support for the dairy business?
Milk producers saw serious risks for the development of the industry due to the withdrawal of state subsidies from large agricultural holdings. We are talking about subsidies that were used to stimulate production. According to the proposal of the Ministry of Agriculture, this money is now planned to be redistributed to other types of assistance to farmers, including the development of new investment projects and the support of breeding and genetic centers, follows from the draft new rules on the allocation of uniform subsidies to regions for priority areas of agriculture. Izvestia has reviewed the document.
According to the explanatory note, starting in 2026, only agricultural producers included in the unified register of small and medium-sized businesses, the self-employed, who run private subsidiary farms, as well as scientific and educational organizations will be able to receive state subsidies. The document does not explain what caused this measure. At the same time, it notes that the direction is a priority, but its funding is decreasing compared to 2025.
— The so-called subsidies "per liter" for producers of raw milk are one of the main measures of state support, effective and efficient. At the moment, the document does not provide for any compensatory mechanisms to replace the shortfall in aid to large companies," Andrey Neduzhko, CEO of Step Agroholding (ranked fourth in Russia in milk production), told Izvestia.
According to him, if the initiative is adopted in the form in which it is proposed today, it will negatively affect the dairy farming industry in Russia. After all, large players, which account for almost 20% of the total volume of raw milk produced in the country, will be excluded from the state support chain.
— The drop in profitability of manufacturers in the event of termination of the subsidy "per liter" may amount to 15-20%. The laws of the market are such that this can affect all other participants in the production cycle, including the end user," explained Andrey Neduzhko.
The National Union of Milk Producers (Soyuzmoloko) also spoke about the risks to the industry.
— Today, the list of measures to support producers is quite wide, and subsidizing the production of marketable milk is one of the most resource—intensive. According to our estimates, this is about 26% of the total amount of assistance to the dairy industry from the federal budget. This measure is in demand today both among relatively small producers and large agricultural holdings," the association told Izvestia.
They also noted that in conditions of weakening demand for dairy products, this may lead to a decrease in profitability throughout the entire value chain.
"It is important to understand that for companies that do not meet the criteria of small and microenterprises and have not invested in the development of milk production in recent years, a change in subsidy conditions will mean a significant reduction in government support," the association stressed.
The Ekoniva Group of Companies, which currently ranks first in Russia in milk production, told Izvestia that, given the federal budget deficit, they understand the decision to reduce aid.
"At the same time, starting in 2026, it is important to return support for subsidizing old investment loans issued for the construction of dairy farms to the level before changes from January 1, 2025," a company representative told Izvestia.
Izvestia wrote earlier about this decision of the Ministry of Agriculture, which increases the financial burden on farmers. At the end of 2024, the ministry published changes to the rules for subsidizing soft loans, which began to cost twice as much.
Anatoly Losev, CEO of Molvest (11th largest milk producer), said that he was aware of the draft new rules, which were currently being studied by the company. He does not think that reducing subsidies to large enterprises will directly affect the price of dairy products. At the same time, he noted that the profitability of the business would decrease because of this.
— The current level of milk prices is normal, there are no large projects or investments, because the loan rate is high and there is no certainty that the preferential rate will not be canceled or changed during the project implementation process, — Anatoly Losev explained. — If we look at the priorities of the state, the funds saved on this subsidy are more needed for new investment projects and support for breeding farms and genetic centers.
At the same time, Izvestia's source in the industry believes that if subsidies are reduced, the costs of dairy farmers will definitely be transferred to one degree or another along the entire production chain to the final price on the shelf.
Measures to support the dairy business
The dairy industry has been and remains one of the most supported in the Russian agro-industrial complex, the Ministry of Agriculture told Izvestia.
— There is a wide range of government support measures for all milk producers. This includes reimbursement of part of the costs for the development of breeding livestock, for the creation and modernization of dairy livestock complexes, preferential short—term and investment loans," the ministry's press service said.
At the same time, they noted that in 2024, the average profitability of the dairy farming industry, excluding subsidies, was more than 28%, which is higher than the industry average.
— Today, small producers account for more than 22% of the total volume of raw milk produced in the organized sector. More than 3.7 thousand peasant farms receive state support, and from 2026 it is planned to strengthen measures to increase their financial stability and stimulate production growth, the ministry explained.
In addition, the Ministry of Agriculture reported that in 2024, self-sufficiency in milk and dairy products in Russia amounted to 85%.
— The growth in raw milk production is also observed this year. According to Rosstat, in the first half of the year, gross milk production by 45.4 thousand tons (+0.3%) exceeded the figures for 2024 for the same period. By 2030, it is planned to increase milk production to 38.5 million tons, including through the implementation of new investment projects in dairy cattle breeding, the introduction of high-tech livestock facilities, as well as through the implementation of measures to further increase dairy productivity of cows as part of breeding work, the ministry's press service said.
Farmers did not see any risks for themselves in the draft new rules.
— If the Ministry of Agriculture distributes only about 500 billion rubles, then this program accounts for only 10% of this volume. We don't see any significant changes in it for ourselves. Currently, direct subsidies for some part of beef cattle breeding remain in the program, part of the support for farmers in milk production remains, since the indicators of the food security doctrine have not yet been fulfilled, as well as measures for the fruit and vegetable group," Babken Ispiryan, deputy chairman of the Council of the People's Farmer Association, told Izvestia.
According to him, indeed, milk production for large enterprises will not be subsidized, but other measures remain in place for them.
— This includes compensation for part of the cost of building new complexes, which small and medium-sized businesses cannot count on. So the Ministry of Agriculture divided it. Small businesses receive payments for milk production, and large businesses receive financial assistance for the construction of farms," Babken Ispiryan explained.
At the same time, he also noted that now large agricultural holdings are taking the lion's share of subsidies for milk production. The volume of their products is increasing, and in nominal terms, small entrepreneurs receive very little money.
Former Deputy Minister of Agriculture Leonid Kholod refrained from assessing a possible price increase. At the same time, he noted that reducing subsidies is not very good for dairy production.
— Let a small amount of money be allocated for this, but milk is not being produced in the country. This problem can only be solved by the sustainability of the industry, because dairy farming is a production with a very long payback cycle and it is 100% low—income. The profit from it is formed by these state subsidies," the expert explained.
According to him, any change in the industry's support system may lead to the suspension of new projects due to the fact that this is a priority area for the country and it needs to be developed.
At the same time, he noted that quite a lot of milk is produced in private subsidiary farms in Russia, but in addition to assistance in subsidizing production, they need a marketing system that has not yet been created.
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