OREANDA-NEWS. June 01, 2010. Producers of dairy products cannot do without some elements of state regulation. This position was expressed by participants of the Expert Council on Agro-Industrial Complex at the Federal Antimonopoly Service (FAS Russia), reported the press-centre of FAS Russia.

Presentations at the meeting were made by: Victor Semyonov, a member of the State Duma, representatives of the Milk Union of Russia, the National Union of Milk Producers - "SOYUZMOLOKO", the Grain Union of Russia, the Russian Union of Ice-cream Makers, the Meat Union of Russia as well as some economic entities - producers of dairy products: "Vimm-Bill-Dann", "Carat", "Russky Kholod" concern, etc.

The Expert Council discussed measures aimed at preventing antimonopoly violations related to agreements between producers and processers of raw milk.

Under the framework of the National Union of Milk Producers - "SOYUZMOLOKO", some market participants signed an Agreement on the general principles of cooperation between milk producers and processers aimed at stabilization and development of the milk sector in Russia. The Agreement fixes the minimum estimated benchmark market price per kilo of raw milk at 11 Rubles, which should serve as a reference for economic entities in 2010 when they independently determine their prices.

Andrey Danilenko, the Chairman of the National Union of Milk Producers, suggested that other market participants join the Agreement, pointing out that it is voluntary. He informed the Council that so far 2239 milk producers and 130 processing enterprises from 38 regions of the Russian Federation had joined the Agreement.

Svetlana Mentyukova, representing "Vimm-Bill-Dann", responded that the company does not plan to join the Agreement due to certain risks. The Agreement must account for seasonal fluctuations and should specify the maximum allowable price in addition to the minimum price.

Vladimir Korsun, General Director of "Carat" CJSC, supported the Agreement.

Victor Semyonov, a member of the State Duma, said that the whole agrarian community went a long way to reach this Agreement."Milk market it the most sensitive in the world. In the absence of such an agreement we could be observing sharp turnarounds in prices", emphasized Mr.Semyonov. He expressed his hope that all existing shortcomings of the Agreement will be removed thanks to the efforts of the FAS Russia's Expert Council.

At the same time the Head of the FAS Russia's Department for Control over Chemical Industry and Agro-Industrial Complex, Teimuraz Kharitonashvili, warned market participants about entering into horizontal agreements that may result in fixing or supporting prices for raw milk. Also FAS warned the authorities of the constituent territories of the Russian Federation and local self-government bodies against direct participation in the Agreement.

Members of the FAS Russia's Expert Council on Agro-Industrial Complex also discussed amendments to the Federal Law "Technical Regulations of Milk and Dairy Products" - revising the concept of "milk-containing products".

The amendments propose a new version of the concept of "milk-containing products", setting restrictions for replacing milk fat in total by no more than 50% of fat phase only with milk fat substitutes. Therefore, ice-cream containing vegetable oil (coconut, palm oil) will not be a "milk-containing product" and cannot be called ice-cream.

"Introducing this norm can have adverse consequences as it will reduce demand for the products. We will give priority to European producers and force domestic producers out of the market", concluded Valery Elkhov, General Director of the Russian Union of Ice-cream Makers.

Svetlana Abrosimova, the Head of the Group for drafting normative documents of the Russian Milk Union, disagreed with him. In her opinion, on the contrary these changes will help consumers better know the range of frozen confections. Cream- and milk-based ice-cream will still be called ice-cream, while we'll have to come up with a different name for sweets with vegetable oils. As for the danger of declining domestic production, according to Ms. Abrosimova, "Technical regulations" is a federal law so export companies also must strictly observe these norms.

Summing up the discussion, members of the Expert Council arrived to an agreement of opinion that the issue of replacing milk fat with tropical oil in ice-cream cannot be resolved without comprehensive scientific inquiry.