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Finns call for EC dairy compensation to offset Russian embargo impact

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By Mark Astley+

19-Aug-2014
Last updated on 19-Aug-2014 at 17:44 GMT

Valio, Finland's largest dairy, has forecast a fall in farm gate milk prices of up to 20% as a result of the Russian embargo, says MTK.
Valio, Finland's largest dairy, has forecast a fall in farm gate milk prices of up to 20% as a result of the Russian embargo, says MTK.

European Commission (EC) compensation will be required to shore up Finnish producers facing a double-digit fall in milk prices as a result of the Russian embargo, farmer representative MTK has claimed.

Speaking with DairyReporter.com, Juha Marttila, chairman, Central Union of Agricultural Producers and Forest Owners (MTK), backed calls to the EC by Petteri Orpo, Finnish Minister of Agriculture and Forestry, to provide compensation to dairy farmers impacted by the Russian export ban.

Earlier this month, Russian Prime Minister Dmitry Medvedev announced a complete ban on the import of beef, port, fruit, poultry, cheese and milk from EU Member States, Australia, Canada, and Norway.

Finland, which boasted €237m (US$315m) of dairy exports to Russia in 2013, claims to be among the hardest hit by the the embargo.

“We agree with our government that some sort of compensation measures are needed,” said Marttila.

The EC announced yesterday that it was allocating €125m (US$166m) to help fruit and vegetable producers affected by the Russian trade block.

“It was a good start,” Marttila said of yesterday’s pledge by the EC.

“But allocation must be relative to losses. It should be allocated according to market implications.”

“We need co-responsibility and solidarity because the impact of the Russian sanctions is different in different states and sectors.”

10% price drop

An exact price is yet to be put on the impact of the embargo, but farmer representative MTK expects farm gate milk prices (FGMP) in Finland to fall by at least 10% as a direct result.

“In the coming two weeks we will probably see price reductions of around 10%,” said Marttila.

“Valio, the largest dairy in Finland, has estimated that this reduction could be as much as 20%.”

“A 20% decrease in milk prices could mean a drop in farmer income of up to 50%. That would be catastrophic.”

“For Finnish farmers this is a very bad situation,” he said. “We are looking at the European Commission, the European Union and our government to provide some sort of help.”

Waiting for proposals

The Finnish Ministry of Agriculture and Forestry has so far pledged financial support to Finnish dairy farmers impacted by the Russian embargo. It has also called on the Ministry of Finance for financial backing to promote Finnish dairy products abroad.

Hoping for more, Marttila called on Helsinki to abandon a planned reduction in dairy farmer support.

“There is a planned reduction of around €100m in dairy farmer support,” he said. “These reductions should be abandoned or at least transport to the coming year.”

Having allocated €125m to fruit and vegetable producers in the EU, the EC now plans to approach the "ongoing market situation for all products."

“The European Commission will continue following market developments for all the sectors affected by the Russian ban on agriculture and food products in close contact with Member States and will not hesitate to support further sectors heavily dependent on exports to Russia to the adapt the measures already announced, it necessary," it said in a statement.

The dairy sector is currently waiting on proposals, said Marttila.

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