Valio says it will be hit hardest of the firms in Finland as a result of the ban

Valio says it will be hit hardest of the firms in Finland as a result of the ban

Finnish dairy manufacturer Valio has said it will be cutting jobs as a result of Russia's ban on EU food imports.

Valio claimed the embargo has hit it "by far the hardest of all companies in Finland". The company exports fresh dairy, butter and cheese products across the border into Russia.

It said it would start talks with staff at four sites in Finland. "Co-operation negotiations on the adaptation measures will commence at Valio's plants in Haapavesi, Seinäjoki and Vantaa, as well as at the Lappeenranta unit. The negotiations concern all staff at those sites, a total of some 800 people," Valio said.

Valio also has a Russian subsidiary in St Petersburg and a cheese production site near Moscow.

In total, the company employs around 500 staff in Russia. The subsidiary office in St Petersburg will remain open and production at the plant will continue. However, the ban may mean a reorganisation of staff at the subsidiary office, a spokesperson told just-food today (11 August).

According to the Bank of Finland, the value of food exports from Finland to Russia subject to the embargo totalled EUR283.4m (US$379m) in 2013. Valio accounts for over 85.4% of the exports.

Speaking to just-food last week, Valio said: "It's a very difficult situation for Valio and puts us in quite a difficult position. We are trying to manage the situation as best we can."

On Friday, Danish dairy co-op Arla Foods announced it would be making cutbacks as a result of the Russia ban.

Additional reporting by Dean Best.

Show the press release

Valio will be hit by far the hardest of all companies in Finland by Russia’s import restrictions. Valio’s biggest exports to Russia are Valio Oltermanni® cheese, Valio Viola® cheeses, Valio butter, and fresh dairy products. The manufacture of all Valio products destined for Russian export was halted on Thursday, 7th August 2014, while that of products for the Finnish and other markets continues as normal. Negotiations in accordance with the Finnish Act on Co-operation within Undertakings are to commence on the adaptation of the number of employees to the decreasing production volumes.

Co-operation negotiations on the adaptation measures will commence at Valio’s plants in Haapavesi, Seinäjoki and Vantaa, as well as at the Lappeenranta unit. The negotiations concern all staff at those sites, a total of some 800 people.

Valio’s Russian subsidiary has begun preparations for the gradual run-down of operations as the current inventory becomes exhausted and sales end. Valio has around 500 employees in Russia. The production of the Russian processed cheese plant will though continue.

The fall in production may lead to unpaid lay-offs and the non-renewal of fixed-term employment contracts once the co-operation negotiations have been completed. There is at this time no estimate on the number or duration of possible lay-offs.

Valio to suffer most

Valio will be the hardest hit of all companies in Finland by Russia’s food import embargo.

According to the Bank of Finland, the value of food exports from Finland to Russia subject to the embargo totalled 283.4 million euros in 2013. Valio’s share was 85.4%, 242 million euros. Russia has been Valio’s biggest and a continuously growing export market, which generated almost 20% of the company’s net sales last year.

In comparison, for example poultry exports from the US to Russia subject to the embargo totalled 227 million euros in 2013, which is less than the value of Valio’s exports to Russia. And Russia is the second biggest poultry export market for the United States (source: NCC).

The total value of dairy product exports from Germany to Russia was 165 million euros in 2013 (source: ZDF), that will say less than the loss suffered by Valio alone. Germany’s milk production volume is 15 times that of Finland.

Valio is obliged to process all the raw milk produced by its owners, the Valio milk producers. Alternative markets for the milk are being sought.

Original source: Valio