Russia invades Ukraine: Dairy exporter Fonterra monitoring conflict

Russia accounts for 1 per cent of New Zealand dairy exports. Photo / File

Dairy exporting heavyweight Fonterra says the safety of its staff in Russia is its top priority as it monitors possible impacts on its sales from the Russia-Ukraine conflict.

The Russian market accounted for about 1 per cent of New Zealand dairy exports in 2021, to the value of about NZ$134 million.

New Zealand's total exports to Russia are valued around $330m and include meat, wine and apples.

Dairy is the major export product, most of it butter.

"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 are operating as usual. We are closely monitoring the developments and will take action as required, but have not needed to at this stage," a Fonterra statement said.

One of the staff is a New Zealander.

For humanitarian reasons food, including dairy, is exempt from international sanctions regimes and can be traded.

Fonterra said despite this exemption, it regularly monitored geopolitical developments and had "robust" processes to ensure it met the requirements of sanctions regimes "and understand the broader implications on market dynamics".

None of its customers were sanctioned individuals or entities.

The country's second biggest dairy processor, Open Country, does not export to the region.

Dairy industry organisation DCANZ said it was monitoring the evolving situation in eastern Europe, including to understand the implications and requirements associated with newly announced sanctions and other Government measures.

"For humanitarian reasons food is generally exempt from international sanctions regimes. It is too soon to have a clear picture of what the broader implications on market dynamics might be," executive director Kimberly Crewther said.

Meat Industry Association chief executive Sirma Karapeeva said Russia was a small market for New Zealand's $9 billion meat export sector.

The conflict would not have a material impact on meat exports, she said.

"In 2021, we only exported 259 tonnes of sheepmeat and five tonnes of ovine offal to Russia, with a combined value of $5.8m.

"New Zealand does not currently export any beef to Russia. Ukraine is an even smaller market. In 2021, we only exported five tonnes of sheepmeat (worth $169,000) to the market.

"The sector has the ability to re-direct these small volumes to other markets. However, there are likely to be some indirect impacts in the form of higher fuel prices, which will increase shipping costs globally."

New Zealand wine exports to the region are valued at $30m-plus, NZ Wine chief executive Philip Gregan said.

Kiwifruit marketer Zespri said it did not export fruit directly to Russia.