Processors have started terminating contracts with raw material suppliers due to an oversupply of raw milk. The reason for this was also a decrease in consumption among the population of finished products – cottage cheese, sour cream, yogurts, cheeses.
Producers of finished dairy products hope counterparties will agree to lower purchase prices. To date, the cost of milk has reached an all-time high – by 13% in industries with state subsidies.
As Kabosh Group milk producer and processor owner Dmitry Matveev explained, some processors are really trying to break contracts with suppliers. Dairy workers who do not have long-term contracts suffer the most from this situation. At the same time, suppliers can recognize through the court refusals to accept raw materials as illegal.
The general director of the Foodland company, Maxim Polyakov, told Kommersant that he does not refuse existing contracts. However, its production does not conclude new contracts either and expects “a possible drop in the price of raw milk”.
– Kommersant market source says demand for raw milk will recover after price drop. State subsidies for the production of raw milk have made this activity very profitable and have led to an excess of raw materials, the publication also notes.
