The company claims it will be hit the hardest of all companies in Finland by Russia’s import restrictions.
Fresh dairy products
Valio’s biggest exports to Russia are Valio Oltermanni cheese, Valio Viola cheeses, Valio butter, and fresh dairy products.
Valio declined to comment when DairyReporter contacted the company for information.
However, in a statement, a spokesman said: “The manufacture of all Valio products destined for Russian export was halted on Thursday, August 7, 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 take place at the firm’s plants in Haapavesi, Seinäjoki, Vantaa, and its Lappeenranta unit. The negotiations concern all staff at those sites, approximately 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 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,” the spokesman added.
Valio’s biggest export market
According to the Bank of Finland, the value of food exports from Finland to Russia subject to the embargo totalled €283.4m in 2013. Valio’s share was 85.4%, €242m. 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 €227m in 2013. Russia is the second biggest poultry export market for the US (source: NCC).
The total value of dairy product exports from Germany to Russia was €165m in 2013 (source: ZDF). 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.