Fonterra to exit Russian businesses

Fonterra, New Zealand's biggest business, to exit Russian businesses. Photo / File

Almost one month after Russia invaded Ukraine, dairy exporter Fonterra has made a decision to exit its businesses in Russia.

New Zealand's biggest business suspended shipments to Russia at the end of February. Russia invaded Ukraine on February 24.

Fonterra exports a small amount of product to Russia, primarily butter, totalling about 1 per cent of its annual exports.

The cooperative employed seven people in Moscow with Fonterra Russia and around 35 in Saint Petersburg with Fonterra's joint venture Unifood.

Fonterra in a statement said it would withdraw from this joint venture.

Asked why it had taken this long to make the decision to get out of Russia, Fonterra in a response to the Herald said:

"We suspended shipments to Russia at the end of February. Since then, we have been assessing the impact of economic sanctions on Russia and discussing the future of our operations with our people, customers and partners.

"Taking into consideration our long-term plans for the Russian market, and our confidence that we can re-allocate product, we've now made the decision to close our sales office in Moscow and withdraw from our JV Unifood."

Farmer-shareholder advocate the Fonterra Cooperative Council discussed the situation with Fonterra board and management last week, said council chair James Barron.

Not a lot of farmer feedback on the matter had been received by the council, he said.

Any comment on the decisions were for the board and management to make.

Moscow staff would be re-deployed where possible, the company said.

It was confident it could reallocate product for Russia to other markets given current strong global demand for dairy.

New Zealand has been exporting butter to Russia for more than 40 years. Fonterra entered the joint venture Unifood in December 2018.