The Russian government’s decision to boycott agricultural products from the EU will have an immediate and significant impact on the Danish dairy giant Arla.
Arla has suspended all production of dairy products for the Russian market because of the boycott, a market worth about a billion kroner for Arla in 2013.
“Our focus now is to ensure the viability of our owners’ milk by tailoring our production to other products which we can sell on other markets,” Peder Tuborgh, the head of Arla Foods, said.
Tuborgh admitted that the loss of the Russian market would have consequences for Arla because the company had made long-term investments into milk brands, distribution and customer relations in that important growth market.
Jobs on the line
The stopping of exports is a step back for the Danes and could lead to job cuts within the company.
“It’s too early to say how much it will mean in kroner and øre, but I can’t rule out that it will have consequences in terms of jobs at our dairies,” Astrid Gade Nielsen, the head of communication in Arla, told Børsen.
In particular, Arla exports butter and cheese to Russia and it is now trying to figure out which other markets that can replace that now closed market.
Along with the EU – the US, Canada, Australia and Norway also made Russia’s banned list.