Russia’s sanctions and counter-sanctions imposed as a result of the war in Ukraine continue to hamper food exports to neighboring countries. The big local market is closed, but the milk spills from Finland as powder to China and as butter to France.
Do you remember still Putin cheese?
In August 2014, cheese, such as a kilo of Oltermann, was sold at a sharp discount in Finland.
The European Union had imposed economic sanctions on Russia over the occupation of Crimea by Ukraine. Russia responded by imposing its own counter-sanctions, which forced Finnish food companies to stop exporting to the neighboring country.
The Finnish Food Safety Authority (Evira) granted an exemption, which allowed food to be sold in Finland with Russian labeling. These dairy products sold in Finland were nicknamed the President of Russia Vladimir Putin by.
Milky and meat exports from Finland to Russia are still virtually at a standstill due to the sanctions shield.
In practice, one company in Finland is responsible for the export of dairy products: Valio. It exports dairy products to about 60 countries for more than 400 million euros. Valio’s total turnover last year was approximately EUR 1.81 billion.
“We are currently focusing on local production in Moscow. Russia is about a quarter of what it was before the sanctions, ”Valio’s Vice President, Export Markets Elli Siltala says.
“The sanctions made a notch of about € 400 million in revenue.”
Siltala also worked on exports in 2014, when the sanctions came into force.
“The Seinäjoki factory learned that butter could no longer move. The sanctions made a gap of around EUR 400 million in turnover. ”
According to Customs’ foreign trade statistics, Finnish food exports to Russia have also fallen sharply since sanctions.
As late as January – November 2013, Finland exported about 370 million euros worth of food to Russia. In January – November 2020, there were only about 86 million food exports.
Siltalan According to the Commission, export markets in Poland and Spain, for example, have been growing strongly since the sanctions. The amounts have remained small.
Real growth comes from China and France. For example, milk powder is exported to China for almost EUR 100 million a year in infant formulas and to France for around EUR 55 million.
“Finnish butter is hard, it creates leafy croissants.”
Cheese has not found a new market as well since the closure of Russian borders.
Valio is exporting cheese to Japan and the United States, which have discovered pizza culture, and Valio’s Oddlygood vegan cheeses have also begun to flow. Valio expects strong growth in sales of plant-based products, but so far exports are a few million euros annually.
Finnish Exports of food and beverages increased to EUR 1.77 billion last year. The largest export items are dairy products and meat. Most food and drink is exported to the EU. The largest individual countries are Sweden, China, Estonia, Germany, Russia, France, the Netherlands and Denmark.
Prior to the sanctions, Russia was by far the largest single exporting country.
“There would be a big market next door where Finnish food has been valued and popular,” says the industry manager responsible for exports and trade policy at the Finnish Food Industry Association. Marika Säynevirta.
Säynevirta says the dairy industry has managed to find new markets.
“Global demand for dairy products is pulling and China is pulling particularly well.”
Säynevirta, as a representative of an industry association, does not want to take a position on sanctions policy. He also notes that food exports are also affected by many other trade policy changes, such as Britain’s secession from the EU and US tariffs on European cheeses a couple of years ago.
“We are adapting to a general political situation where several things are happening at the same time,” Säynevirta says.
Mostly changes in policy are not as rapid as in the case of sanctions in 2014, when the journey of pieces of cheese to Russia came to a halt like a wall.
“It affected the whole of Europe and other markets and caused a stir in the world market. It took a while for the situation to balance, ”says Säynevirta.
Valio Siltakala does not comment on the policy either, but states that the company is “always interested in a profitable export market”.
“If the border opened, we would complement local production, but we don’t count it on the card. We have 60 different export countries, so there are other alternatives, but we always miss Russia. ”
Russia has risen to headlines in the food and beverage industry in recent weeks due to the country’s new Champagne Act.
In early July, President Putin passed a law requiring all foreign sparkling wine producers to specifically call their products sparkling wine. The characterization must be marked on the back of the bottle.
By law, the champagne title is reserved only for the Russian sparkling drink, champagne.
The law provokes France in particular, as the term champagne comes specifically from a province in the north of France. Traditionally, only sparkling wine made there has been allowed to be sold under the name of champagne.
This name protection is used in more than 120 countries. There is a large-scale business around the champagne, as in 2020 alone the champagne was exported According to the French champagne industry to the world for EUR 2.6 billion.
The French government has warned Russia that it could take the matter to the World Trade Organization (WTO).