Finnish Prime Minister Alexander Stubb said on Friday that Finland is among the countries hardest hit by Russian food embargo, among the most affected sectors is the diary industry.
DIARY HARDEST HIT
In response to tightened European Union (EU) sanctions imposed against Russia last week over the Ukraine crisis, Russia decided earlier this week to ban agricultural imports from countries that have sanctioned Russia.
The list of embargo includes vegetables, fruits, meat, dairy products and many other agricultural and food products.
According to the Finnish-Russian Chamber of Commerce, Russia is one of the important trade partners of Finland with more than 5.4 billion euros (about 7.2 billion U.S. dollars) of exports from Finland to Russia last year, of which 7.5 percent was food and drink.
Heikki Juutinen, director of the Finnish Federation of Food and Drink Industries, said that the restrictions would bring a huge challenge to the Finnish Food industry, as about 25 percent of Finnish food exports go to Russia.
He said that the Finnish dairy sector would be hardest hit by the Russian food embargo, as two-thirds of the food exports to Russia are dairy products, such as butter, cheese and yogurt.
Valio, the leading dairy producer of Finland with about 30,000 employees around the world, has had a strong foothold in the Russian market.
According to Pekka Laaksonen, managing director of Valio, Russia's role in Valio's operations is significant, since one fifth net sale of the company comes from Russia.
Laaksonen said that it will be extremely difficult to Valio when the Russian market is banned, as their exports to Russia are expected to fall from 430 million euros last year to around 100 million.
Valio announced on Friday that it will begin co-determination talks affecting some 800 of the 3,500 employees in Finland.
Finnish national broadcaster YLE said that Valio might also gradually slacken its operations in Russia, where the company currently has about 500 employees.
Valio' operations in Lappenranta, a Finnish town close to Russian border, will be probably shut down, said YLE. The production of the plant in Lappenranta targets mainly the Russian market on daily basis.
OTHER SIDE OF COIN
In addition to dairy sector, the Finnish meat producers will also be heavily affected.
According to the Finnish Customs, the Finnish meat export to Russia has already collapsed in the first half of this year.
In the first five months of this year, the meat and meat products exported to Russia were worth only 4 million euros, which was 32 percent lower than last year, said the Customs.
It is believed that the Finnish meat producers might not survive the Russian counterstrike. HK Scan, one of the Finnish meat companies, has announced its co-determination talks.
Some Finnish supermarket chains, as well as smaller firms and subcontractors related to exports to Russia will also be hit by the Russian food bans.
However, someone believed that there might be the other side of the coin.
Juha Vaatanen, professor of international business at Lappeenranta University, speculated that Russia's ban on food imports could boost tourism.
He argued that the restrictions on food imports from Western countries could lead to a pick-up in the number of Russians making shopping trips across border to Finland.
He predicted that panic buying banned products is also possible, as Finnish food products are in demand among many high earners in Russia.
According to Statistic Finland, the number of overnight stays by Russian tourists in Finland declined dramatically by 23 percent in May 2014 from one year earlier, because of the devaluation of Russian ruble over the Ukraine crisis.
