Fonterra Leaves Russia to Avoid War Consequences

Article by: Hari Yellina

Fonterra, the world’s largest dairy company, has closed its Moscow office and abandoned a small joint venture in Russia in response to public criticism, including pleas from its farmer shareholders. As a direct result of the Putin administration’s war on Ukraine, the trans-Tasman listed co-operative has shut down its three-year-old Russian Unifood enterprise. Fonterra had already halted exports to Russia in late February, just as an international outcry over the incursion prompted fresh economic and commercial penalties against the Russian government. Fonterra and its predecessor companies’ New Zealand butter exports have been one of Russia’s long-established dairy import categories, extending back four decades.

However, the Russian market accounts for less than 1% of the huge cooperative’s yearly exports. “We are confident in our capacity to re-allocate this product to other markets, given the current robust demand for NZ dairy,” said Miles Hurrell, chief executive officer. Fonterra employs seven people in Moscow, but the Unifood joint venture with a St Petersburg-based distributor is said to employ over 35 people. Mr Hurrell stated that the company’s top concern following Russia’s invasion of Ukraine was to ensure the safety of its employees in Russia. “Following careful assessment of the impact on our workers and our long-term ambitions for the Russian market, we have decided to close our office in Moscow and withdraw from Unifood,” he stated.

Andrew Hoggard, the president of the NZ Federated Farmers, had called on the company to abandon its Russian operations. He considered the business was now most likely worthless. Mr Hoggard, a North Island dairy farmer at Fielding and a Fonterra shareholder, said, “It’s fairly worthless having any business in Russia because they’re basically going to become a pariah state.” Meanwhile, the Agco Agriculture Foundation, a non-profit affiliated with the US-based farm machinery behemoth Agco Corporation, has donated $100,000 to the UN World Food Program to help families affected by the violence in Ukraine and surrounding countries.

Farmers, farming communities, homes, and businesses have all been negatively impacted by Ukraine’s prolonged turmoil, according to the foundation. People were fleeing their homes, their families, their farms, their property, and their businesses. “During this time of turmoil, our thoughts and prayers are with our employees, families, and the people of Ukraine,” said foundation chairman Roger N. Batkin. “Watching the destruction of lives and lands in Ukraine as a result of the situation is very disturbing.” The United Nations World Food Program recently began an emergency operation to deliver food for populations escaping the Ukraine crisis, which is seeking $US570 million in funding. In conjunction with the Agco Foundation, Agco Corporation, the parent company of farm machinery brands Massey Ferguson, Challenger, Fendt, and Valtra, wants to contribute 182,000 meals in three months as part of another “Share the meal” fundraising initiative for the UN food program.