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Sanctions-hit Valio shuts Tampere dairy

Once-flourishing sales to Russia came to an abrupt halt in 2014 when Moscow imposed a trade embargo in retaliation for EU sanctions over the Ukraine crisis.

Mies siirtää maitopurkkeja rullakolla Valion kylmävarastossa
Loading milk at the Tampere plant. Image: Antti Eintola / Yle

One of Finland's biggest food producers, Valio, is shutting down its dairy processing facility in Tampere. The company said on Tuesday that it is beginning redundancy talks with all manufacturing and support staff at the plant, including about 50 people.

Valio says it has lost significant volume of basic milk sales over the past three years or so in Finland. Last year Valio moved production of standard milk types from Tampere to other facilities, with a loss of more than 70 jobs. Tampere has continued to produce speciality types of milk and one type of soft cheese.

"The milk market remains extremely difficult as Russia continues its trade sanctions against the EU. Due to global milk overproduction and weak global demand, prices for milk products are at a very low level. The removal of EU milk quotas has worsened the situation," the company said in a statement.

"Putin cheese" and German yoghurt

As Finland is not a closed market, low prices internationally reflect directly on both imports and exports. For instance, milk and yoghurt from Sweden, Estonia and Germany are frequently found in grocery coolers.

Once-flourishing sales to Russia came to an abrupt halt in 2014 when Moscow imposed a trade embargo in retaliation for EU sanctions over the Ukraine crisis. That forced Valio to sell Russian-labelled "Putin cheese" domestically at cut-rate prices and to lay off 126 employees.

A year ago, Valio cut nearly 200 jobs, blaming the losses in part on a decline in exports to Russia.

"Valio must now use all means at hand to make its operations more efficient so that we can pay our dairy farms a price that ensures their continued livelihood. The local entrepreneurs who own Valio are in real difficulty," says the firm's executive vice president for operations and sales, Mika Koskinen. Valio is owned by 17 dairy cooperatives.

The dairy giant plans to close the Tampere plant by the end of September.

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