ISSN 0798 1015

Vol. 38 (Nº 48) Year 2017. Page 3

Prospects of Import Substitution by Extending the Volume of Russian Dairy and Milk-Containing Production

Perspectivas de la sustitución de las importaciones mediante la ampliación del volumen de producción láctea rusa

Ekaterina Anatolievna ASTASHOVA 1; Natalia Borisovna GAVRILOVA 2; Elena Aleksandrovna MOLIBOGA 3

Received: 12/06/2017 • Approved: 30/06/2017

Content

1. Introduction

2. Methods

3. Results

4. Discussion

5. Conclusion

References

1. Introduction

The policy of developing import substitution can be focused on solving tactical tasks of providing the population with food that can be produced in the country. Import substitution of agricultural products refers to the top priority areas of ensuring the food safety of any country. In this case this policy is adaptive and is stipulated by sudden changes in external political relations between countries when traditional channels to supply import food cease functioning due to any reasons. Specific peculiarities of such import substitution policy include its focus on solving the current problems and meeting needs of the population in imported food. All measures taken by the country government within this policy are short-term and do not aim at solving the system problems of agriculture development and increase in its competitiveness because they are focused on quick solving of the problem related to substituting import goods by domestic ones. Long duration of such policy may finally cause degradation of agricultural areas and catastrophic fall of competitiveness, because the creation of the maximum favorable conditions of functioning for national agricultural producers due to artificial limitations for foreign competitors does not create stimuli for the sector development.

The second area of import substitution development is the creation of the maximum favorable conditions for developing domestic production on the basis of the sector intensification, its transfer to the innovational way of development, increase in the level of competitiveness of national food rather than on the basis of artificial limitations for importers. This import substitution policy is long-term. Positive results of pursuing it will occur in several years.

The above can be confirmed by the fact that for 11 months of 2016, out of the total volume of products made in Russia the export was as follows (%):

• Milk and dairy cream to drink – 1.1%,
• Fermented-milk products - 3%,
• Condensed canned milk – 4.8%,
• Butter and butter pastes - 2%,
• Cottage cheese – 3.1%,
• Cheese – 2.9%, and
• Cheese products – 10.2%.

Today there is the third product whose export volumes increase. These are cheese products. In 2015 5.2 thous. t. were exported, and in January-November 2016 12.7 thous. t. or about 10% of the total dairy production were exported. The reason why cheese products are popular is the population’s income fall, because the main market of sales is CIS countries, the population of which suffers from crisis.

In the list of milk-containing products cheeses and cheese products happened to be the most important. Their ratio was 33.5%, and 44.5%, including cottage cheese (Table 1). 

Table 1. Volumes of Export of Main Groups of Russian Dairy Products

Besides, there are also problems during import and export procedures between countries of the Eurasian Economic Union (EEU): high differences related to material expenses for preparing documents and the speed of export goods moving. The situation will not change for the better until the customs administering is fully synchronized in EEU countries.

If to consider cheese and cheese products production, in 2016 it continued growing, although slower: in 2014 the growth tempo was 115.3%, in 2015 it was 117%, and in 2016 it was 102.8%. According to the operative data of the Rosstat, in 2016 597.4 thous. t. of cheese and cheese products were produced.

As compared to 2015, the production structure (Table 2 and 3) changed inconsiderably due to increasing the ratio of natural cheeses. 355 thous. of natural cheeses, 106 thous. t. of processed cheese and 136.4 thous. t. of cheese products were produced.

Table 2 . Production of Cheeses and Analogue Cheeses in the Russian Federation

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Table 3. Structure of Cheese-Making Products in the Russian Federation

It is possible to note the activation of farmer cheeses production, and production of famous foreign brands by using the capacities that belong to Russian cheese producers as basic trends.

The decrease in the production growth tempos came with the increase in import supplies of cheeses. Thus, for 10 months of 2016 the import increased by 11.3% up to 158.4 thous. t. The Republic of Belarus increased the export of cheeses to Russia by 17.4% - 133.8 thous. t., which made up 84.4% of the whole import.

Works of many authors like Altukhov A. (2014), Koroliuk E.V., Mezentseva E.V. (2016), Kopein V.V., Filimonova E.A. (2016), Shagaida N., Uzun V. (2016), Plotnikov V.A., Vertakova Yu.V. (2014), Semenova N.I., Utiatskiy S.P. (2015), Nardin D.S., Shumakova O.V., Nardina S.A. (2016) are devoted to issues related to developing import substitution and ensuring food safety in the food sector. To a great degree, successful development of import substitution of agricultural products depends on conditions of the country agricultural complex functioning, level of infrastructure development and improvement of institutes and tools of the sector development. The works of Stukach V.F. et al. (2015), Stukach V.F., Astashova E.A., Shumakova O.V. (2006) also covered these issues. Balykova L.N. (2015), Golubev A.V. (2016), Shumakova, O.V., Nardin, D.S. devoted their works to developing import substitution in the food sector.

In spite of the considerable interest of researchers in the problem related to developing import substitution of milk-containing products as a whole and in producing cheese and processed cheese products in particular, there are still problems that require close attention.

Milk-containing production, in particular production of cheeses and cheese products, is one of the main milk content areas of the dairy industry, and issues related to developing import substitution are always under special control.

The goal of this research is to study the prospects of import substitution of milk-containing products, in particular cheeses and processed cheese products, in the Russian Federation made using technologies of the Omsk specialists. The work sets the following tasks:

1) To analyze the volumes of dairy products market, including cheeses, in the Russian Federation,

2) To define opportunities of import substitution by cheeses produced domestically,

3) To define promising areas of developing import substitution of milk-containing products of Russian producers taking into account their milk content.

2. Methods

The market of import cheese products is analyzed by using the database of the customs statistics of the external trading of the Russian Federation (Customs Statistics of External Trading]. Official website of the Federal Customs Service, 2017). For the period since 2013 till 2016 the volumes of import cheese products in physical and monetary term were analyzed, tendencies of changing them were revealed and described.

Peculiar technologies of cheese and processed cheese products made in the cooperation of specialists from the Omsk State Agrarian University with specialists of milk processing enterprises were used as the research object (Table 4) (Moliboga 2014).

Table 4. Practical Use and Scientific Novelty of Technologies

The research material includes the nutrition and biological value of products made by using the above technologies, functionality, safety, and economic efficiency of production.

Indicators of the developed products safety were defined according to the Technical Regulation of the Customs Union “On Milk and Dairy Products Safety” (TR CU 033/2013) and comply with statutory requirements. It means that the developed technologies of products are safe to introduce to the diet of people of various age groups and as on the expiry date they contain 1-107 CFI/G of revivable germs (Moliboga 2016a; Moliboga 2016b; Moliboga 2015; Lisin 2015).

The traditional technology of producing processed cheese products supposes to include various dairy products in the receipt. Their mixture is usually exposed to fine grinding and mixing with emulsifying salts. The structure formation of such multi-component mixture is a comprehensive process that depends on a number of factors.

The technology of above processed analogue cheeses for specialized nutrition is peculiar by the fact that the main raw materials are represented by two components:

• Cheese and/or cheese mass for processing with the accelerated term of maturing and vivid ability for changing the phase state as influenced by emulsifying salts,
• Functional ingredient that contains prebiotic and probiotic that allows considering it a synbiotic biocomponent.

To combine these two components into a single structure, the impact of the structure former was additionally researched. It contributes to binding adherent moisture, prevents synaeresis when storing processed analogue cheeses. To stipulate the essence of structure formation and level of the stabilization system impact, the work used the method of relaxation (nuclear magnetic resonance, NMR) to define the relative number of the binding and adherent water in dairy products (Gavrilova 2015; Moliboga 2010).

When defining promising areas for the development of import substitution of cheese and processed analogue cheeses by local analogues, the work took into account the volumes of import, cost of import, and cost of analogous local products and expenses for creating technologies of local products that can compete with import goods.

3. Results

3.1 Analysis of the market of Imported Cheese and Processed Analogue Cheeses in the Russian Federation.

Table 5 shows the data characterizing the volumes of dairy products’ import (including cheeses) in the Russian Federation (Official website of the Federal Customs Service of the Russian Federation, 2017). 

Table 5. Volume of /milk and Dairy Products’ Import in the Russian Federation

Note: *According to the Official Website of the Central Bank of the Russian Federation, 2017

The above data say about the considerable decrease in the volume of cheeses import in the Russian Federation. During the period since 2014 to 2016 the import of cheeses and cottage cheeses decreased by 35%. The decrease is caused by the sanctions introduced against the Russian Federation by a number of countries in the late 2014 and the relevant response of Russia. As a result, in the 1st quarter of 2015 the volume of cheese and cottage cheeses import was only 37,726 tons (Figure 1).

Figure 1. Dynamics of Cheese and Cottage cheeses’
Import in the Russian Federation in 2013 – 2016, tons

As a result of the continuing sanction policy in relation to Russia and taking response measures, the volume of milk and dairy products import had decreased down to 207,927 tons and was 65% as to 2014. The share of import milk and cream in Russia decreased from 60.5% in 2013 down to 56.4% in 2015, cheese - from 48% in 2013 down to 23.3% in 2015 (Table 6). For nine months of 2016 the share of import cheese made up 24.1%. Thus, cheeses from the European Union and the USA disappeared from Russian stores. Thanks to this, national producers got great opportunities to win over consumers. In 2016 the cost of cheese and cottage cheeses’ import was USD 696.9 mln. or RUB 46,716.3 mln. 

Table 6. Share of Import of Some Products in Their
Marketable Resources in the Russian Federation, %

 In the context of counter-sanctions, the sector also improved its investment activity. Russian enterprises started launching new capacities to use their brands when producing those types of cheese that used to be imported. Thus, in November 2015 the Russian JSC Molvest (holding the third place in the Russian Federation in terms of the volume of milk processing) and the Dutch company Arla Foods established the production of cream cheese with the project capacity of 9 thous. t (the volume of investments was RUB 60 mln.) at their enterprise in the Voronezh Region. In its turn in September 2015 in the Smolensk Region Krasnaya Gorka Agro-Industrial Complex opened Phase 1 of the section on producing goat cheese with the project capacity of 35 t. of cheese per year. After opening Phase 2, the volume of production capacities will increase up to 120 thous. t. The cost of the project will be RUB 250 mln.

Among new projects it is also possible to mention the launch of the cheese and cottage cheeses’ line at the Derevenskoe Molochko LLC in Tomsk (one of the leading milk processing enterprises of Siberia) that took place in November 2015. The investments were RUB 10 mln. At the same time the investment council at the administration of the Ruzskiy municipal area of the Moscow Region provided the Terehovo Association of Peasants’ and Farmers’ Households with 200 ha of land for constructing an enterprise on producing analogues of such types of cheese as mozarella, gorgonzolla, cachotta, buratta, parmesan, mascarpone, etc.

In 2016 the investment activity decreased in the area. It is indirectly proved by slowing down the tempos of the production increase. In January-August 2015 the production of cheeses increased by 25.1% (up to 389 thous. t.) per year, and for eight months of 2016 it increased only by 1% (up to 394 thous. t.). According to the estimates of IndexBox, it is related to decreasing the real income of the population (minus 5.8% of the annual income in January-August) and the value appreciation of the cheeses production cost. Two-digit tempos of the area growth in 2014-2015 were achieved through not only import substitutes, but also cheeses of the low price segment and analogue products of low quality.

In 2016 there is a tendency of inconsiderable increase in the volumes of cheese import. However, as compared to 2013, the volume of cheese import decreased by 53%. Specialists relate the outlined increase in milk and dairy products import with the consumers’ disappointment by the quality of Russian cheeses and need to develop technologies of high quality cheese and analogue cheeses. At the same time it is possible to solve this problem by using technologies with the decrease in the main dairy raw materials during dairy production, i.e. milk content productions.

The decrease in milk and dairy products’ import made producers solve the problem about substituting withdrawn volumes of goods by domestic dairy products.

Over the recent 2 years the government of the Russian Federation has activated its work on developing its own dairy and milk-containing products with low milk content.

 In addition to material and technical resources, in order to successfully develop the cheese area, Russian producers need scientific developments in this area to provide efficiency of all stages of the scientific and technical progress.

3.2 Analysis of Opportunities to Import Substitute Cheese and Processed Analogue Cheeses by Local Analogues

Research laboratories of the Omsk State Agrarian University systematically create technologies of various specialized milk-containing products for functional nutrition.

The characteristics of new products shown in Table 7 can be a good substitution to those products that are imported to the Russian Federation, because it is a domestic product adapted for the ecological and economic situation in the country.  

Table 7. Characteristics of Qualitative Indicators of Processed Products
to Distribute in Sales and Catering Points in the Western and Eastern
Siberia, Southern Ural, and Central Part of Russia*

Note: *According to the experiments made by the authors

It goes from the table that processed analogue cheeses used as functional food are characterized by high biological value and can be considered as a result of implementing the comprehensive technology of processed analogue cheeses that allows achieving the goal set in the research work.

In addition to the qualitative indicators, new products are characterized by the content of functional food ingredients that allow considering them as functional food and recommending them for specialized nutrition of the population of various age groups to sanitate it and decrease risk of diseases development.

3.3 Promising Areas of Developing Import Substitution of Foreign Products by Technologies of Russian Producers

The first promising area of developing import substitution is the saving of the main milk raw materials in cheese and processed analogue cheeses production technologies.

When developing the offered technologies of analogue cheese production, the main task was to decrease milk capacity and, as a consequence, to decrease the cost and increase the profitability of production. The main ways to decrease milk capacity include the prior processing and enrichment of raw materials, decrease in wastes during production, and the use of new equipment and advanced technologies.

Another area is the use of biologically proper vegetable raw materials both in the normalized mixture and receipts of cheese and processed analogue cheeses.

4. Discussion

The obtained results of the research allow to make a conclusion about rather specific prospects of developing import substitution by Russian cheese and processed analogue cheeses. At the same time, it is necessary to understand that the above areas of developing import substitution require special attention of the state. On the one hand, it is stipulated by ensuring food safety and decreasing the dependence on import of one of the key agricultural areas in the Russian Federation. On the other hand, agricultural producers cannot efficiently develop biotechnological area without the state support due to its high capital capacity and long term of returning investments. Taking into account the fact that applying both traditional and innovative approaches to developing technologies of high quality ecologically friendly food allows obtaining and introducing a new range of milk-containing products to the market (when using the created base of the developed innovation technologies), far from every investor will be interest in this project.

The above areas of developing import substitution of cheese and processed analogue cheeses are focused on long-term perspective and will contribute to improving sustainability of milk processing area in the Russian Federation.

5. Conclusion

Russia is still one of the leading net importers of dairy products. The internal market of dairy products shows the sustainable availability of import and the growth of its share in the product offering. The export increases slowly. The growth by 8% in 2016 is explained, in addition to the political reasons, by the increasing poverty of the country population who has to save on food, which stimulates producers to search for new sales channels. The change of the ruble and basic currencies rate correlation that made export attractive is also important.

In 2016 the domestic consumption of milk and dairy products by the country population was 33 mln. t., with above 7.3 mln. t. being imported. It is possible to say that the deficit of milk is still high – 7.8 mln. t. - because today there are limits as for importing dairy products in the form of food embargo, and the decreased demand due to the reduced revenues can be recovered in the future. High price segments of cheeses and other dairy products remain unfilled. This is about 1 mln. t. more.

When considering the import substitution of domestic cheese and processed analogue cheeses, this research did not touch upon the organization of technological process and biotechnology in the Russian Federation. At the same time it is necessary to understand that the only wish of producers to move to domestic production technologies may not be enough, because these technologies must be fully tested. The more efficiently technological production processes are organized, the more competitive domestic technologies are. This issue becomes especially urgent taking into account the possible need in the nearest future to compete with foreign technologies obtained by applying technologies of creating modified additives. Today the law prohibits using such technologies in the Russian Federation. However, the existing world and internal tendencies of developing the statutory base point at the fact that in the near future legal limitations will be discharged. As a result, domestic producers will have to compete with foreign producers on equal terms.

For the dairy industry to become a key national export cluster, and for Russia to transform from a net importer into the net exporter country in the future, today it is necessary to focus efforts on developing dairy farming. It requires hard work of countrymen and efficient support from the state.

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1. Omsk State Agrarian University named after P.A. Stolypin Federal State Budgetary Educational Institution of Higher Education, 644008, Russia, Omsk, Institutskaya Square, 2. E-mail: astash@list.ru

2. Omsk State Agrarian University named after P.A. Stolypin Federal State Budgetary Educational Institution of Higher Education, 644008, Russia, Omsk, Institutskaya Square, 2

3. Omsk State Agrarian University named after P.A. Stolypin Federal State Budgetary Educational Institution of Higher Education, 644008, Russia, Omsk, Institutskaya Square, 2