In March 2013, the government of the Russian Federation distributed federal finance to provincial authorities, to subsidise local milk producers.



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Resolution 337 of the Russian Government dated 12.03.2013,

Inception date: 12 Mar 2013 | Removal date: 11 Aug 2013

Production subsidy

On March 12, 2013, the Government of the Russian Federation approved with Resolution Nr 337 the disbursement of federal subsidies to the listed regional and provincial authorities. In turn, the latter will provide milk producers with reimbursements of expenses related to production and marketing of milk. The regional authorities decide modalities of subsidisation based on regional specificities, with the federal government only regulation the amoounts disbursed. 
The disbursement of these federal subsidies is part of the sub-programme 'Development of the livestock subsector, processing and marketing of livestock products' of the State Programme for Development of Agriculture in 2013-2020. It amounts to RUB 9.56 Billion (USD 314.74 Mio.), which constitutes 100 per cents of the assigned for 2013 subsidy.

The purpose of these state subsidies are to alleviate a difficult situation faced by the Russian milk production and processing sector. Andrej Danilenko from the National Union of Milk Producers explains that the negative development of the sector is a consequence of rising prices of raw milk since 2012, due to reduced number of milking cows (and respective decrease of produced milk volumes) provoked in turn by a deficit (and respective increasing prices) of mixed fodder and fodder grain. As a result, the Russian milk producers started experiencing losses. Danilenko further stated that the crisis on the local milk market led to an increase in milk imports; his import forecasts for 2013 are for 11 million tons, compared to the 2012 historical figure of 9 million tons. The subsidies planned could well reverse the increases in import penetration.