Valio's logistics center in Riihimäki on Thursday, August 7, 2014 where the production of Russia bound products has been stopped. Photo – Lehtikuva.
The Finnish dairy product manufacturer Valio has announced that it has halted export of dairy products to Russia.
Russia on Thursday announced a ban on import of food products from European Union countries as well as other western nations such as Norway, Australia and Canada.
Following the counter measures from Russia, Valio said it will redirect milk supplies originally intended for processing dairy products for the Russian market for other purposes.
Valio’s turnover from sales in Russia is about 400 million euros, which is about a fifth of its total net sales.
Valio's logo. Photo – Lehtikuva.
Despite Russian food embargo, Valio CEO Pekka Laaksonen said the company will continue to receive milk supplies from producers and process and sell the products.
“The situation is extremely unfortunate,” remarked Laaksonen.
The ban will however inevitably translate to a huge financial loss. The shift of milk supplies for other purposes is, according to Laaksonen, not as lucrative as the Russian market.
The situation is risky, said Laaksonen, as the company has hundreds of employees in Russia.
According to his estimation, Valio’s Haapavesi and Seinäjoki factories will be most affected in case the ban continues for at least a year.
The long-term effect of the embargo on dairy product prices cannot be assessed immediately, but in the short term the ban does not seem to have a lasting impact, said Laaksonen.
