Russian ban could cost dairy giant Arla dearly

Russia’s import boycott of Western agricultural products could be especially painful for Danish dairy giant Arla, which says roughly one billion kroner and scores of jobs risk being lost.

Russian ban could cost dairy giant Arla dearly
Arla Foods' Troldhede Dairy in Videbæk. Photo: Jørgen Kirk/Scanpix
Arla said on Friday that Russia’s import ban on food and agricultural products could cost the jobs of up to 75 employees. 
“We are still calculating how bad it will be, but as of now our initial expectations are that it could be in the area of 50-75 jobs spread across various diaries,” Arla’s communications spokesman Theis Brøgger told Danmarks Radio.
The Russian market accounts for around one percent of Arla’s combined global revenue, or roughly one billion kroner ($180 million). The company stopped all production of Russia-bound products on Thursday and is currently trying to redirect thousands of tonnes of milk that would normally be headed to Russia. 
According to Brøgger, Arla had pinpointed Russia as one of its strategic growth markets. The company primarily exports cheese and butter to the Russian market. 
The Danish Agriculture and Food Council (Landbrug & Fødevarer) on Thursday characterised Russia’s sanctions as “serious” for the national agriculture sector but said Danish firms would be able to find customers for the products normally sent to Russia. 
“Danish food companies are generally good at finding new markets. If Russia stops imports, it doesn’t mean that we will throw our goods away,” Landbrug & Fødevarer’s administrative director, Søren Gade, said in a statement. 
“We believe that we can find sales opportunities in other parts of the world, including the growth markets in Asia where the demand for Danish food products is great. But there is clearly a risk that [Russia’s import ban] could affect prices on the global market,” Gade added. 
Denmark’s agricultural exports to Russia amounted to 4.3 billion kroner ($772 million) in 2013. Nearly half of that, 2.1 billion kroner ($377 million), is from the export of pork, which Russia stopped at the end of January due to the risk of swine fever. 
A researcher at the University of Copenhagen’s Department of Food and Resource Economics estimated earlier this year that up to 7,000 Danish agricultural jobs are dependent on exports to Russia. 

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Will Denmark see the return of mink farms in 2022?

After all mink breeders were last year forced by the government to close down their farms, discussions are beginning on whether the industry could return in 2022.

Will Denmark see the return of mink farms in 2022?
A mink at a North Jutland fur farm in August 2020. Photo: Henning Bagger/BAG/Ritzau Scanpix

All fur farm minks in Denmark were culled late last year and the practice banned until 2022 after an outbreak of Covid-19 in the animals at several farms led to concerns over mutations of the virus.

The mink industry was subsequently given a gigantic compensation package worth up to 18.8 billion kroner.

Parliament’s environment and food committee will meet on Tuesday to discuss whether to extend the current ban or allow the industry to return. Political negotiations were scheduled to take place following an orientation published the same day by the State Serum Institute (SSI), Denmark’s national infectious disease agency.

In a statement released on Tuesday morning, SSI maintained an earlier risk assessment that mink breeding constitutes an health risk of “unknown proportions” for humans in Denmark.

READ ALSO: Danish PM Frederiksen to be questioned over Covid-19 mink culls

The assessment, made by the agency in June, remains the position held by SSI, the infectious disease agency said.

“It is the general assessment of the State Serum Institute that breeding of mink in Denmark after 2021 could constitute a health risk for humans of unknown proportions,” the June assessment stated.

Three key risk factors were identified by SSI in June:

  • Breakthrough Covid-19 infections in vaccinated mink breeders and skinners
  • The potential of mink farms to act as an “infection reservoir” where the virus can continue to survive
  • Emergence of new Covid-19 mutations in the animals and their spread to humans

The SSI assessment was solely concern with potential risk to humans, and did not have the task of considering safety measures for reopening farms.

Prior to the release of SSI’s statement on Tuesday, the interest organisation for the mink fur breeding industry, Danske Mink, criticised the appraisal made by the agency in June.

The formulation of the assessment was imprecise and “quite erroneous”, Danske Mink chairperson Louise Simonsen said.

The earlier orientation did not give an accurate representation “both with the number of animals and with the vaccination situation,” Simonsen argued.

Around 1,000 mink farms operated in Denmark at the time the industry was shut down.

Simonsen, in comments prior to Tuesday’s SSI statement, said she was uncertain how many were likely to restart their shuttered breeding grounds.

“We’ve had several messages from breeders who want to start up. But that number won’t stabilise until we know what we’re looking forward to,” she said.

The Conservative Party said through its spokesperson Per Larsen that SSI should have conducted a “risk assessment using groups of, for example, 50,000 or 100,000 minks” to see how “vaccinated mink, vaccinated staff and weekly testing could work”.

“Saying there’s a risk of unknown proportions is of no use whatsoever. It could mean nothing or many things,”” Larsen said.