Russia bans imports of Ukrainian milk powder

According to Kommersant-Ukraine, Rosselkhoznadzor (Russia’s federal veterinary and vegetable control service) announced that as of August 20 it will not permit milk powder to be imported from Ukraine. This ban was imposed after following inspections of Ukrainian dairy plants in July 2008. In addition, Rosselkhoznadzor announced a preliminary list of seven Ukrainian cheese makers allowed to deliver their products to Russia, compared to 15 before. The decision on other Ukrainian dairy plants being allowed to import to Russia (31 were inspected last month) will be announced by August 20. Olha Pankiv: We view this milk powder ban as temporary and expect Russia to reopen its borders to these products in October-November 2008. The seasonal increase in supplies of both raw milk and milk powder from Ukraine and Belarus into Russia depressed domestic raw milk prices, and in our view, the ban was designed to prevent a further decline in domestic raw milk prices in Russia. We believe that the ban will have only a marginal effect on Ukrainian dairy producers (in 2007, only ~10% of Ukrainian milk powder was exported to Russia), who will switch deliveries to the Middle East while the ban is in place.