Dairy Sector Takes a Look at Canada

The country's troubled dairy industry is looking for help, and Canada is one of the countries it is turning to, with deals worth about $10 million expected to be signed between Canadian and Russian agribusinesses on Tuesday.

A 56-member delegation, headed by Canadian Agriculture Minister Gerry Ritz, was to hold negotiations with about 30 representatives from Russian agricultural firms and Agriculture Minister Alexei Gordeyev on Tuesday morning and then sign the contacts at the Canadian Embassy in the evening.

"The deals will embrace the agricultural technologies such as efficient breeding, as well as the sales of bull semen and live hogs," Nathan Hunt, the head of the Canada Eurasia Russia Business Association, said Monday.

Among the participants will be Exima, one of the country's biggest agricultural holdings, Semex, a Canadian supplier of cattle genetics technologies and products, and FGC, an agricultural construction company.

Agricultural trade between the two countries in 2007 was worth $300 million, with most of the goods heading to Russia.

"We have been importing beef and pork to Russia, but now our partners are increasingly interested in new technologies to produce themselves," Hunt said.

At a Monday briefing at the Agriculture Ministry, Gordeyev said Russia was ready to learn.

"Canada has worked out a very good system for regulating production and marketing in the dairy sector, from insurance to innovative processes, and we will be learning from this experience both in the private and public sectors," Gordeyev said.

Gordeyev offered milk production as an example, saying the average Canadian cow gives more than twice the milk of the average Russian cow.

Russian cows produce 3,769 kilograms of milk on average for a lactation period of 305 days, according to figures from the country's milk union. The average Canadian cow, meanwhile, produces 9,700 kilograms over the same period.

To try to close the gap, more than 105,000 high-quality cows were brought to Russia in 2006 and 2007, said Rosagroleasing, the state-run company responsible for all cattle imports.

The dairy cows were mainly imported from Canada, Australia, Germany and France.

"The market for foreign elite cows is hot, as we currently have 90,000 more orders for cows from all over the world," said a spokeswoman for Rosagroleasing, who asked not to be named, in line with company policy.

One explanation offered for poor production from domestic dairy cows was the damage done by the economic and political instability in the 1990s.

"We used to have a well-developed breeding system in Soviet times, but Chechen wars and White House revolutions destroyed it," said Mikhail Ryzhkov, a veterinarian at Rosagroleasing. "Several years ago, we had to start all over again from scratch."

Revenues for the Russian dairy market in 2007 were $4.5 billion, according to estimates by ACNielsen consulting, compared with a Canadian figure of $5.2 billion, according to Statistics Canada.

Russia's cows produced 32 million tons of milk that year, according to the dairy union.

"These indicators are very poor," said one representative from the milk union, who spoke on condition of anonymity, as he was not authorized to speak to the press. "Farmers give their cows low-quality feed and do not observe sanitation rules. As a result, the productivity, both in number of calves and amount of milk, fall dramatically."

Hunt, of the Canada Eurasia and Russia Business Association, was more diplomatic, but still critical on the issue.

"In the last five years, many Canadian agricultural experts have visited Russia to consult on building farms," Hunt said. "Russians need not only to import, but also to implement the technologies.

"Especially when you are dealing with the breeding farm, sanitary violations may have disastrous consequences," he added.