Russian state aid to dairy companies

Oct. 03, 2022

The Russian government has approved billions of dollars worth of subsidies to domestic dairy companies to offset costs associated with mandatory labelling. It also tentatively agreed to impose zero import duties for another six months on a long list of key equipment and raw materials to circumvent the impact of Western sanctions.

Russian Deputy Prime Minister Victoria Abramchenko recently announced that the federal budget will reimburse dairy producers 70% of the costs associated with the purchase of labelling equipment. The measure is scheduled to take effect in early 2023.

Artem Belov, chairman of the Russian dairy producers' union Soyuzmoloko, said the measure would help "stabilize the financial situation of the Russian dairy industry" and "relieve the difficulties of the past few years".

The Russian dairy industry estimates that introducing mandatory labelling will cost about 12.2 billion rubles ($200 million), of which 8.9 billion rubles ($148 million) will go to labelling equipment, Belov said, adding that Russian dairy companies will have to spend It costs 9 rubles and 15 billion rubles ($150 and $250 million) to buy tags from Russian national operators annually, with some additional costs.

Belov expressed hope that the Russian government will also expand its soft loan program at the subsidized rates that Russian companies have been taking advantage of for the past few years.