Following Russia’s invasion of Ukraine, and the subsequent sanctions imposed upon Russia, doing business with the world’s largest country is becoming increasingly complicated.
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What are companies doing with respect to their business in and with Russia? Pic: Getty Images/da-kuk

Amid calls for boycotts of companies still doing business in Russia, some companies have been announcing their positions on humanitarian efforts, as well as on doing business in both countries.

Danone to continue operations in Russia

French-headquartered global dairy giant Danone issued a statement by general secretary Laurent Sacchi on the conflict.

“At Danone, we are all deeply affected by what we are seeing every day since the invasion of Ukraine.​

“Danone and all its employees express their solidarity with the people who are now suffering the atrocities of war.​

“Since the beginning of the conflict, our first priority has been for the safety of our employees in Ukraine, with whom we remain in constant contact. We continue to be moved by their bravery.”​

The company said one of its two factories has closed in Ukraine, the second was closed but has managed to resume operations.

“Our teams in Poland, Romania and several other countries have spontaneously offered to host their Ukrainian colleagues. We have received many messages of generosity and solidarity from “Danoners” all over the world who are asking how they can help. We will work to support them in their offers and expand on their actions and initiatives,”​ the company said.

Danone said if the war lasts for a long time it will lead to increasing difficulties for the population affected to get hold of basic goods.

“As a food company, and because of our raison d’être, Danone is well attuned to the importance of these issues.​

“To support humanitarian aid, which is the immediate priority, we have made a donation of €500,000 ($544,000) to the Red Cross. This will be used to supply water, food and medicine. In addition, Danone will match fund every euro donated by our employees for humanitarian efforts. We are also working with the Red Cross to explore how we can bring a variety of basic necessities to Ukraine. Our teams in neighboring countries are actively involved in collecting and distributing goods to refugees.”​

The company said it has suspended all investment projects in Russia, but currently maintains its production and distribution of fresh dairy products and infant nutrition, to “meet the essential food needs of the local population.​

“We continue to monitor and assess, in real time, how the situation evolves and will, of course, apply the decisions of the French authorities with whom we remain closely coordinated.”​

Valio stops Russian operations

Finland borders Russia, and its biggest dairy company, the cooperative Valio, has ceased operations in its neighbor to the east.

“We strictly condemn Russia’s attack on independent Ukraine. Ethically, Valio cannot continue operations in Russia; therefore, we are ending business operation in Russia,” ​said Valio’s CEO Annikka Hurme.

Valio has one processed cheese factory near Moscow, contract manufacturing partners and sales offices in St. Petersburg and in Moscow. Valio employs approximately 400 people in Russia. Annual sales of Valio in Russia have been approximately €85m ($92.5m). Valio’s subsidiary in Russia is 100% Finnish-owned by Valio.

“The exit process will start immediately. The decision to end the business and ramp down operations involves many details that we have been working on,”​ the company said.

Last week, Valio stopped all exports from Finland to Russia and Belarus. In addition, imports of ingredients and packaging materials from Russia to Finland were stopped.

Arla suspends operations in Russia

Arla Foods has initiated preparations to suspend its business in Russia. This will cover both its local operations and imports, which the company said were much reduced by the embargo put in place in 2014.

The company is continuing its work to be ready to provide food aid to Ukraine and its refugees in neighboring countries, working with the Red Cross and other humanitarian organizations. Arla is also donating €1m ($1.1m) to the Red Cross.

CEO Peder Tuborgh said, “The impact and consequences of Russia’s invasion of Ukraine are tragic, I share the hopes of so many around the world, that a peaceful resolution is found quickly. We are now taking action to suspend our operations in Russia and are focused on how to support our 70 colleagues in Russia who are directly affected by this.”​

Fonterra stops butter shipments but facilities stay open

New Zealand dairy cooperative Fonterra has presence in Russia in both Moscow and St. Petersburg.

Simon Tucker, director global sustainability, stakeholder affairs and trade, told Dairy Reporter, “Our people’s safety is our top priority. We have seven people based in Moscow with Fonterra Russia and about 35 people based in Saint Petersburg with Fonterra’s joint venture Unifood. Both entities continue to operate at this time, however we are keeping an eye on the situation and will take actions as required. The businesses do not supply sanctioned individuals or entities, including Russian military or security forces. ​

“Fonterra exports a small amount of product to Russia, primarily butter, totaling about 1% of our annual exports. While food, including dairy, is generally exempt from international sanctions regimes and can be traded, we have suspended shipments of product to Russia while we continue to monitor developments. This includes assessing the impact on both payment infrastructure and our supply chain to Russia.”​

Elopak paying Ukraine staff

Elopak said it is deeply concerned by the tragic developments in Ukraine and stands with all those who are suffering at this time. Elopak has wholeheartedly condemned the unprovoked attack by the Government of Russia and supports the resulting economic sanctions implemented by the EU and other actors.

“This war has an enormous human cost. As a result of the ongoing and escalating conflict, Elopak is today announcing the suspension of all activities in Russia with immediate effect and until further notice. Elopak’s plant in Fastiv, Ukraine, has already been temporarily closed as we work to protect the safety of our colleagues and their families. ​

“We will continue to pay the salaries of our 336 employees directly affected until further notice. As part of the vital food supply chain, Elopak continues to monitor and evaluate the situation. We are assessing how best we can adapt our operations to support continued access to essential goods across the Eastern European Region. ​

“Our overriding priority remains the personal safety and security of our employees in Ukraine. We are in constant touch with our co-workers in Kyiv and Fastiv and have established a steering group that is working to support them and their loved ones.”​

The decision is not expected to impact Elopak’s operations outside of Russia, Belarus and Ukraine.

Farmers stand with all those suffering from the war in Ukraine

The European Milk Board​ calls for an immediate end to the war in Ukraine. “We strongly condemn the attack against the territorial sovereignty and people of Ukraine. Farmers stand with all those, in all countries, who are suffering from this war.​

“We urge dairies in the EU to stop their exports to Russia and to send their products to Ukraine as emergency relief. Likewise, we urge the EU itself to make use of its position and stop exports to Russia.​

“How can we help? In addition to participating in demonstrations calling for an end to the war – held in various countries – donating medicine, food and essential goods is also possible. We encourage you to donate to credible organizations in your different countries. We thank you for your support!”​

Stora Enso stops production and sales in Russia

Stora Enso today announced it will stop all production and sales in Russia until further notice due to the ongoing invasion in Ukraine. Stora Enso has three corrugated packaging plants and two wood products sawmills in Russia, employing around 1,100 people. The company will also stop all export and import to and from Russia. A mitigation plan has been activated to secure availability of input materials from other sources.

“The war in Ukraine is unacceptable and we are fully behind all sanctions. We will now focus all our attention on supporting our customers and the well-being of our employees,”​ said Annica Bresky, president and CEO.

Stora Enso’s sales in Russia is approximately 3% of total Group revenues. The impact on Stora Enso’s sales and EBIT is not material.

Europe must equip its agriculture with a food shield to face the consequences of two major crises: the war in Ukraine and climate change.

Ekosem-Agrar AG suspends guidance for the 2022 financial year

The executive board of Ekosem-Agrar AG, which is the German holding company for the Russian milk producer EkoNiva Group, said it has decided to suspend the forecast for the 2022 financial year.

The company said this was due to “the currently considerable imponderables regarding the operating business as well as the financing possibilities due to the increasing restrictions in connection with the Russia-Ukraine conflict, resulting both from sanctions against Russia and from Russian countermeasures.”​

For the year 2022, the company said it had previously assumed an increase in net sales of more than 20% for each of the three main areas of raw milk production, crop production and milk processing. Earnings before interest, taxes, depreciation and amortization (EBITDA) and cash EBITDA were expected to increase disproportionately compared to the previous year.

The board of management said it will publish an adjusted guidance “as soon as largely reliable parameters for adjusting the forecast are available.”​

The company did not respond to Dairy Reporter’s questions about involvement in Russia.

Ukraine agriculture organization to join Copa and Cogeca

Agricultural group Copa and Cogeca held a coordination meeting with its members on the humanitarian situation arising from the war in Ukraine.

It said the solidarity of the farming community with the Ukrainian people is real and visible in all member countries.

It noted farmers are starting to welcome refugees to their farms, and the first convoys organized by farmers are on their way, along with food, supplies and financial donations. Copa-Cogeca will be publishing information for farmers, cooperatives and any citizen who wants to support the actions undertaken by the EU agricultural community on its website​.

In the coming days, Ukraine’s agricultural organization UNAF​ (Ukrainian National Agrarian Forum) will join the European farming community by becoming a Copa and Cogeca partner.

Ramon Armengol, Cogeca president, said, “Welcoming our Ukrainian colleagues to Copa and Cogeca is the natural extension of this expression of solidarity that is taking place on the ground by farmers and their cooperatives. The European farming community is mobilising at all levels to provide concrete support to the Ukrainian people and refugees arriving in all member states.”​

On the political and economic front, the organization said initial analyses show the importance of the reconstruction challenges that European agriculture will face in the short and medium term, noting the war will have worldwide repercussions for several years to come.

“Most productions will be directly or indirectly impacted. It is therefore essential to have a European response that equals the humanitarian and economic disaster,”​ Copa and Cogeca said.

“Exceptional situations call for exceptional measures. The speed of application of these measures is of crucial importance. Some sectors already heavily affected by the price increases resulting from the Covid and energy crises must be supported without delay, while other farmers need clear policy guidance as they start sowing.”​

Christiane Lambert, Copa president, said, “Since the Russian government is using food security as a weapon, we must counter it with a food shield. As with energy, in agriculture we strongly believe that it is possible to strengthen our strategic autonomy while continuing to make progress on sustainability. Pitting these two dimensions against each other, as we have heard in Brussels in recent days, is unproductive. We need to rearm our agriculture today to face these two major crises at the same time: the war in Ukraine and climate change.”​

Copa and Cogeca said food security is highly strategic and still very relevant.

“A paradigm shift is needed in the way Brussels thinks about agriculture, starting with the objectives set out in the Farm to Fork. Farmers and cooperatives are now waiting for concrete guidelines and actions as a solution to food, energy, climate, and environmental challenges. As the current President of the AGRIFISH Council, French Minister Denormandie, rightly declared at the end of the exceptional meeting of the Council on Wednesday, it is urgent to unleash the potential of European agriculture to mitigate the effects of this war. ​

“Copa and Cogeca are asking to be able to cultivate all available land in 2022 to compensate for the blockage of Russian and Ukrainian production. Everything must be done to prevent disruptions in supply chains, which will inevitably lead to shortages in certain parts of the world. This is an essential question of food sovereignty and democratic stability.”

AAK temporarily halts deliveries to, and sales in, Russia

Ingredient company AAK has decided to temporarily halt deliveries to, and sales in, Russia. Even though AAK is a supplier in the food sector, which is not subject to sanctions, the company said it has become very difficult to secure compliance to sanctions related to logistics and trade flows as well as third parties.

AAK has a sales office in Ukraine with approximately 10 employees, and the company said their safety is the main focus.

“We are in continuous dialogue with them and will do our utmost to ensure their continued safety,”​ AAK said.

Russia makes up for 3% of AAK’s volumes, as measured in metric tons, and Ukraine makes up less than 1%. AAK said it is continuously evaluating the situation and will respond accordingly.

Tetra Laval donates to Ukraine

Tetra Laval, the group which comprises Tetra Pak, Sidel and DeLaval, is donating €2m ($2.2m) to humanitarian support to Ukrainians in Ukraine and those that have been forced to flee to neighboring countries.

“We are deeply distressed by the war in Ukraine and join all parties calling for peace. To reflect our sense of values, we will do what we can to support local humanitarian efforts,”​ said Lars Renström, chairman of the Tetra Laval Group.

The company is donating €1m to UNICEF’s Drive for Ukrainian Children to support the more than half a million children already affected by the war, and a further €1m will be allocated to secure safe food distribution for refugee camps mainly in collaboration with Tetra Pak’s local customers.

Tetra Laval told Dairy Reporter, “Tetra Pak condemns the Russian invasion of Ukraine and is deeply concerned by the war. It is tragic and terrible. The war is affecting our colleagues, friends, partners, suppliers, consumers, customers, and their families and friends. We stand with all of those who are impacted by the violence, and we join all parties calling for peace and an immediate ceasefire.​

“Our priority right from the start has been to ensure the well-being of our employees, with whom we are in regular touch, helping them stay safe as best as we can.​

“We are supporting humanitarian efforts and providing support to assist with the increasingly difficult refugee situation.​

“In parallel, we will prioritize safe food distribution, whilst monitoring the impact of changing policies, sanctions and supply-chain issues on a daily basis. Disruptions to the production, processing, packaging and distribution of food will have a significant impact for all communities that rely on us for safe food. We are dismayed and greatly saddened that it is now increasingly impossible to make food safely available to individuals and households in Ukraine and that this may shortly also become impossible in Russia, which will impact individual consumers significantly. Out of concern for the people of Ukraine and Russia, we will seek to continue our operations as long as this is practically possible.”​

In a statement sent to Dairy Reporter, Unilever’s CEO Alan Jope said, “We continue to condemn the war in Ukraine as a brutal and senseless act by the Russian state.​

“Our business operations in Ukraine have stopped and we are now fully focused on ensuring the safety of our Ukrainian employees and their families, including helping with their evacuation where necessary, and providing additional financial support. We have also committed to donate €5m ($5.5m) of essential Unilever products to the humanitarian relief effort.​

“We have suspended all imports and exports of our products into and out of Russia, and we will stop all media and advertising spend. We will not invest any further capital into the country nor will we profit from our presence in Russia. We will continue to supply our everyday essential food and hygiene products made in Russia to people in the country. We will keep this under close review.​

“We join​ calls for an end to this war and hope that peace, human rights, and the international rule of law will prevail.”​

Nestlé, which also has operations in Russia, did not respond to requests for comment.

PepsiCo to continue dairy operations

Wimm-Bill-Dann Foods is one of the biggest dairy companies in Europe, with a greater than 30% share of the dairy market in Russia. It is owned by PepsiCo.

PepsiCo sent Dairy Reporter a copy of an email CEO Ramon Laguarta sent to PepsiCo associates. ​​

“As the tragic war continues in Ukraine, I wanted to update everyone on PepsiCo’s activities in the region,” ​Laguarta said.

“As many of you know, we have been operating in Russia for more than 60 years, and we have a place in many Russian homes. Pepsi-Cola entered the market at the height of the Cold War and helped create common ground between the United States and the Soviet Union. However, given the horrific events occurring in Ukraine we are announcing the suspension of the sale of Pepsi-Cola, and our global beverage brands in Russia, including 7Up and Mirinda. We will also be suspending capital investments and all advertising and promotional activities in Russia.​

“As a food and beverage company, now more than ever we must stay true to the humanitarian aspect of our business. That means we have a responsibility to continue to offer our other products in Russia, including daily essentials such as milk and other dairy offerings, baby formula and baby food. By continuing to operate, we will also continue to support the livelihoods of our 20,000 Russian associates and the 40,000 Russian agricultural workers in our supply chain as they face significant challenges and uncertainty ahead.​

“Our first priority continues to be the safety and security of our fellow Ukrainian associates. We suspended operations in Ukraine to enable our associates to seek safety for themselves and their families, and our dedicated crisis teams in the sector and region continue to closely monitor developments in real time.​

“We are also continuing to provide aid on the ground to assist Ukrainian refugees in neighboring countries. Our business has donated food, milk and refrigerators to relief organizations, and we’re ramping up production of foods and beverages in neighboring countries to meet the increased need. We are also donating a total of $4m to the Red Cross in Poland, World Vision in Romania, the World Food Program, World Central Kitchen and Save the Children. And we continue to match up to $1m raised from PepsiCo employees through our Gift Matching Campaign. The number of associates expressing concern for our colleagues and a genuine desire to help has been truly inspiring, with some of you even volunteering to take refugees into your homes. Your kindness and generosity speak volumes about our company, and we will continue working to support your efforts. ​

“My heart goes out to all those who are caught in the middle of this deadly conflict. As it so often does, war is falling hardest on the innocent. War is never an answer, and we join all those calling for a speedy, peaceful resolution.”

Global Dairy Trade Event #306 concluded with the aggregate down 2.9%. Cheddar cheese was down 0.1%. Whole Milk Powder was 4.9% lower. Skim Milk Powder fell 0.6%. Butter dropped 1.0%

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