IDM ¦ Market report
What could happen
if Russia reopens
its dairy market
for EU exporters
Potential scenarios and implications
In 2014, the European Union imposed
economic sanctions against
the Russian Federation. In response,
the Russian Federation imposed import
bans on agricultural products
(including dairy products) from the
European Union as a countermeasure.
As a result of the bans, EU dairy
exports (some annual 30,000 tons
26 · February 2020 ¦ international-dairy.com
of butter, 257,000 tons of cheese,
21,000 tons of SMP and 26,000 tons
of whey powder) in total annual
value of EUR 1.4bn towards Russia
have come to a complete halt.
Following the introduction of the
sanctions, EU dairy prices (butter,
cheese and SMP) continued to decrease
significantly.
The EU economic sanctions are
effective until the end of July 2020.
Nevertheless, lately we have been
hearing that the EU and Russia
might be reconsidering their current
stance. Once these sanctions are no
longer in place, we expect a shortterm
positive price shock to European
dairy prices and a significant
business opportunity for competitive
EU dairy players. The potential
cheese import of Russia is currently
at around 250,000 tons per annum,
where EU producers used to enjoy
almost 60% of market share. On
a smaller scale, the Russian dairy
market also has the potential to
open up several tens of thousands
of tons of additional butter export
for EU producers.
As a response to Russia’s annexation of
Crimea, international sanctions were
imposed against Russia. The European
Union imposed economic sanctions
(export bans) in July 2014 targeting
its trade relationship with Russia in
specific economic sectors (including
the dairy sector). In August 2014, as