Russia reconsiders Polish dairy ban

- Last updated on GMT

Related tags: Poland, Russia

Russian authorities are set to readmit Polish dairy exports,
according to unconfirmed reports appearing in the Polish press last
week, but will this be enough to satisfy overseas investors?
asks Tom Armitage.

According to the Polish News Bulletin​, the Russian authorities are considering allowing Polish dairy imports to restart after months of strained political and economic relations between the two countries.

Campina, the Dutch milk co-operative, has already jettisoned its production and distribution activities in Poland, claiming that the sites were no longer financially viable.

It has always maintained, however, that investment should be channelled into the more lucrative (and less erratic), "emerging"​ markets across Asia and the Middle East.

But following last week's developments, concerns have been raised that Campina may have made a somewhat premature decision.

Already Paris-based dairy conglomerate Danone has been given permission to export from two of its Polish dairy facilities.

The clash over exports dates back to September last year when Russia's health authorities alleged that Polish dairy imports did not comply with its stringent health and safety standards (although this was widely interpreted as a thinly veiled attempt to slow the flood of dairy exports and protect its domestic dairy industry).

But despite conducting an immediate investigation across Poland's eighty or so dairy facilities, Russian health authorities have yet to reveal their findings - leaving Polish dairy producers reeling from the loss of one of their most lucrative export channels. Prior to the export ban, an estimated one fifth of Danone's Polish turnover, for instance, was generated through Russian exports.

One unnamed CEO from a Polish dairy was quoted as saying: "The Germans, French or Lithuanians can export their products to Russia and we cannot, which is an embarrassment for the Polish authorities."

Earlier this month, Poland's deputy chief vet, Cezary Bogusz, warned that a decision on export licences should not be expected before mid-February "at the earliest."

Following the loss of Russian export revenue, the burgeoning Polish dairy sector has become increasingly competitive (and therefore less attractive to overseas investors) as producers seek to consolidate sales across the domestic market.

According to market research analysts Datamonitor​, the Polish dairy sector grew by an estimated 6.7 per cent every year between 1998 and 2003, with the cottage cheese, kefir and yoghurt categories all showing strong growth potential.

Related topics: Markets, Emerging Markets

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