Russia's embargo on food imports from the European Union is tightening its grip on the sector as Arla has announced a revision of its milk price.
The dairy manufacturer announced that its standard milk price will be reduced to €1.5 cents/kg (1.2p a litre) from September 1st. The company highlighted worsening market conditions and the introduction of restrictions on imports to Russia. Arla becomes the latest food company that has felt the squeeze of the new ruling imposed in reaction to further sanctions placed on Russia by the EU and US.
Workers within the frozen fish market have also been highly concerned about the restrictions imposed by Russia. The UK imports a total of £17 million of frozen fish and seafood to the Eastern European nation and the move has prompted worry that jobs could be put at risk. Scotland could bear the brunt of the changes with fishing towns such as Peterhead basing a lot of its economy on trade with Russia.
Despite Russia easing its dairy ban, imposed on August 7th, to allow lactose-free milk to enter the country, it has still impacted significantly on Arla's operations. The move has meant that its standard litre price is now set at 30.38p per litre.
Ash Amirahmadi, Arla UK’s head of milk and member services said: “Global commodity markets have fallen sharply over recent months – a development that has affected dairy companies, including Arla.
"In addition, Russia has announced a ban on agricultural import from certain states, including the EU. The ban has affected Arla Foods’ exports and we are now unable to export products to Russia."
The trade embargo has already seen Arla cut 79 jobs at its plant in Denmark. The company was forced to embark on a restructuring of its production as it adjusted to the new rules implemented by the ban.