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Fonterra is to close its office in Moscow and relocate staff elsewhere; confident of finding alternative markets for dairy products

Rural News / news
Fonterra is to close its office in Moscow and relocate staff elsewhere; confident of finding alternative markets for dairy products

Forty years after first sending shipments of butter to Russia - New Zealand is ending exports to that country following its invasion of Ukraine.

Fonterra has on Monday said it would "exit" its businesses in Russia following the dairy co-operative’s decision to suspend shipments of product to that country at the end of February.

Exports to Russia, primarily of butter, make up about 1% of Fonterra's annual business.

Fonterra chief executive Miles Hurrell said the co-op's first step following Russia’s invasion of Ukraine was to establish the safety of the team in Russia, "and our priority through this process continues to be doing the right thing by our people".

“We then suspended shipment of product to Russia while we assessed the impact of economic sanctions and discussed our long-term plans with our customers and joint venture partner.

“Following careful consideration of the impact on our people and our long-term plans for the Russian market, we will now close our office in Moscow, re-deploying staff where possible, and withdraw from our joint venture Unifood.” This joint venture has been going since December 2018.

Fonterra has seven employees with Fonterra Russia (sales office) in Moscow, and there are 35 employees with the JV Unifood in St Petersburg.

A Fonterra spokesperson said exit "will come at a cost to the co-op" but this will be "less than $10 million so not considered material".

Hurrell said given the current strong demand for New Zealand dairy products, "we are confident in our ability to re-allocate this product to other markets".

Dairy product prices have been sky high this year as strong demand has run into crimped supply. Production in the current New Zealand season is well down on earlier expectations and running about 4% below last year's levels.

That's all seen Fonterra signal a Farmgate Milk Price likely to be around $9.60 per kilogram of milk solids - which will shatter the previous record payout of $8.40 in 2014.

See dairy payout history and economists' price predictions.

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17 Comments

That'll show 'em.

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Well done Fonterra.

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Mostly we are using Ukraine to grind up the Russian army, prolong the conflict as long as possible in the hope that the 80% of Russia's army that isn't in Ukraine gets drawn into the fighting there.  That way they will be too busy to fight anybody else.

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I bought an extra can of baked beans just in case Russia's navy surrounds NZ with an embargo. I also heard doubling up on your Covid-19 masks will help with any nuclear fall out if Putin nukes us.

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Forty year’s worth. And it wasn’t all plain sailing I bet. Fonterra have had some unhappy ventures internationally, Venezuela, Chile for instance. This crisis may have been opportune reason to quit another one?  Be that as it may, Fonterra looks solid these days doesn’t it, and that is of vital benefit to all of us.

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From what I remember the butter trade with Russia began with a trade deal with us taking their Lada’s.

The eighties saw quite an influx of Lada’s, some dressed up such as the Niva RV I think. We were desperate for markets for butter not long after the UK joined the then EEC (EU).

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Have heard many stories about the trials and tribulations of doing business with Russia, including the offer of payment for butter in the form of planes. I tend to agree with you in that this was likely coming regardless of the conflict.

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really stupid move given Brits are taking Russia gas and oil as usual.

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they have already begun a phase out of this to be complete by the end of year -- not an insignificant step at all - and i guess  99% of Kiwis will support us not doing business with a country shelling children, hospitals, schools and shopping malls in another country !

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There is a need for some neutral countries capable of negotiating a peace deal. This could have been a role for NZ. What Russia is doing is terrible but who will act as a go between if everyone takes sides?

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We are a NATO partner so appear to be taking sides and are no longer neutral. When did that happen?

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John Key signed the NATO agreement in 2012 but it is non binding. 

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Intrigued by that comment as cannot sight any reference in the actual  article or by subsequent commenters, that claims NZ is a NATO partner? 

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Now we are providing military aid to a NATO Trust Fund, so called non-lethal aid if there are such non-lethal militaries. https://www.scoop.co.nz/stories/PA2203/S00167/nz-to-provide-non-lethal-… This will help the Ukrainian Army Azov battalion nazis which have a reputation of being lethal to civilians. https://en.wikipedia.org/wiki/Azov_Battalion

 

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Bullying countries east and west have long used economic retaliation to create a climate of fear, standing against mass civilian murder with unity is a rare world event, this move by Fonterra albeit insignificant in the scale of the war should be applauded - as a shareholder “well done “

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