Arla Foods has told just-food Russia’s decision to ban dairy products from the EU will lead to redundancies in its home market of Denmark.
The dairy co-op, which has annual sales of around DKK1bn (US$180m) in Russia, said between 50 and 75 jobs at dairies in Denmark will be lost after Moscow’s decision to block imports in retaliation for sanctions from the EU and the US.
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“We had it confirmed last night we would be affected by this ban, we immediately ceased all production for the Russian market. That involves around ten dairies in Denmark and one in Sweden,” a spokesperson for Arla said today (8 August).
By far the majority of our production for Russia is in Denmark. In Denmark, where the most dairies are, we’ll probably have a reduction of between 50 and 75 employees next week, unless something surprising changes over the weekend.”
None of the ten affected dairies would close and Arla said the milk processed in each of the sites for Russia will be used elsewhere.
However, there is a concern Russia’s ban on dairy products from the EU – as well as from the US, Canada, Australia and Norway – will depress milk prices.
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By GlobalData“It’s certainly a risk all dairy companies will be facing,” the spoksperson said. “We’ll be able to use all the milk – it’s just an issue to use it in a way that carries a profit closest to what we had in Russia. Our main aim now is to handle this situation in a way that leaves the least negative impact for our co-operative owners.”
Russia only accounts for just over 1% of Arla’s annual turnover but it was one of the overseas markets on which Arla was focusing to drive its growth. Sales had increased at a double-digit rate over the past three years.
Arla started local cheese production in Russia earlier this year but that only accounts for 1% of its sales in the country, the spokesperson said.
“It’s about 1.3% of our global business but Russia was a very imporant market for Arla, a strategic growth market for us,” the spokesperson said. “We were in the middle of tripling our business and some of the most impressive growth rates were in Russia. We have been investing in Russia recently and had plans to do so further. We still hope for the opportunity to do so.”
Fish, fruit, vegetables, meat, milk and dairy imports from the EU, the US, Australia, Canada and Norway have all been hit as Moscow retaliates after a fresh wave of sanctions were imposed on Russia last week. The ban is effective immediately and will last one year.
