2015 proved to be a difficult year for Finnish dairy co-operative Valio as the full effects of the Russian trade ban and the decline in global dairy markets in the latter half of the year lagged the group’s performance.

Full year sales declined by almost 12% to just over €1.7bn, with sales declining in both Valio’s export markets and its own domestic market in Finland. The group paid out €739m back to its farmer owners last year, which is almost 17% down on the previous year’s payment.

Valio said its operating performance in 2015 was impacted by a number of simultaneous factors, including the Russian embargo and weakening consumer purchasing power in Asia. The group added that overproduction from the large Central European dairy countries resulting in a global excess of supply over demand for dairy products and served to weaken the market.

Valio added that weak global dairy markets resulted in low export prices for its products and an increase in cheap imports into Finland. The Finnish domestic market also saw tough price competition as well as weaker consumer purchasing power.

Leading milk price

Despite the difficult trading conditions, Valio paid one of the highest milk prices in Europe to its farmers last year at 38.5c/litre – down from the 45.4c/litre paid in 2014. The high milk price reflects the high cost of milk production in Finland.

The group’s milk supply for the year was just under 1.9bn litres for the year, a near 2% year-on-year decline in milk supply highlighting how Finnish dairy farmers actually sought to decrease output last year despite the ending of European milk quotas.