Unifood

Mar 21, 2022

Share New Zealand dairy giant Fonterra Co-operative Group will exit its businesses in Russia, shutting its office in Moscow, joining other multinationals leaving the country . Fonterra is responsible for approximately 30 per cent of the world’s dairy exports, and has a portfolio of well-known brands including Western Star, Perfect Italiano, Bega Cheese, Mainland and Australian Dairies. Fonterra is exiting Russia where it has 42 staff members. Brendon O'Hagan The co-op exports a small amount of product to Russia, primarily butter, totalling about 1 per cent of its annual exports. Fonterra suspended shipments to Russia at the end of February. Other big corporates from Apple to Nike have halted sales in Russia amid a growing backlash to the country’s invasion of Ukraine. Despite Ukraine president Volodymyr Zelensky urging Western businesses to leave Russia, other multinationals such as Danone have stopped new investments but remain operating, citing a responsibility to “the people we feed [and] the farmers who provide us with milk”. Advertisement Fonterra chief executive Miles Hurrell said following Russia’s invasion of Ukraine the group aimed to establish the safety of the team in Russia. “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,” said Mr Hurrell. “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.” Fonterra has seven staff members in Moscow, and another 35 in its joint venture with Unifood, which was established in 2018. The joint venture with Unifood in Saint Petersburg supports butter and protein distribution. It was not clear how customers in 11 countries near Russia would be serviced, since they were serviced from the regional HQ in Moscow. New Zealand has been exporting butter to Russia for more than 40 years. Advertisement Milk prices are at record highs and given the strong demand for New Zealand dairy, Mr Hurrell was confident the co-op would be able to re-allocate this product to other markets. Mr Hurrell recently warned the conflict in Ukraine had “added to an already complex COVID-19 operating environment, impacting global supply chains, oil prices and the global supply of grain”. At the group’s recent half-year results, he confirmed the forecast Farmgate Milk Price range of $NZ9.30 to $NZ9.90 per kg of milk solids and forecast normalised earnings guidance of NZ25¢ to NZ35¢ per share remained unchanged. Fonterra is seeking to divest its Chilean business and spin out its Australian business to return around $NZ1 billion to shareholders and unit holders by fiscal 2024. Carrie LaFrenz has more than 10 years' experience as a business journalist having previously covered healthcare, retail/consumer goods, industrials and agribusiness. She is based in our Sydney newsroom. Connect with Carrie on Twitter . Email Carrie at carrie.lafrenz@afr.com Save