Fonterra's nyet to Russia

Major dairy companies are either pulling out of Russia or reducing their manufacturing footprint in the country as a result of the Ukraine war.

Fonterra last week announced that it would exit its businesses in Russia, just weeks after suspending shipments of product to that country.

The world's largest dairy company, Danone, is also suspending all investment projects in Russia.

However, it will maintain production and distribution of fresh dairy products and infant nutrition "to still meet the essential food needs of the local population," the French company says.

Nestle, the second largest dairy processor in the world, says it will continue to provide "essential food products" to people where it operates.

"In Russia, we continue to focus on meeting the needs of the local people," Nestle says.

However, it has halted all advertising activities and also suspended all capital investment.

Finnish dairy processor Valio, which operates a cheese factory in Moscow and solve $200 million of products to Russia, is also pulling out. Meanwhile, Arla Foods says it has initiated preparations to suspend its business in Russia.

Fonterra's decision ends its 40-year butter trade in Russia. The co-op exports a small amount of product to Russia - primarily butter - totalling about 1% of its annual exports.

Fonterra chief executive Miles Hurrell says their first step following Russia's invasion of Ukraine was to establish the safety of its team in Russia.

"Our priority through this process continues to be doing the right thing by our people.

"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."

He says the co-op will now close its office in Moscow, re-deploying staff where possible, and withdrawing from its joint venture Unifood.

Hurrell believes given the current strong demand for New Zealand dairy, the co-op will easily re-allocate this product to other markets.