Valio was one of the hardest hit of all companies by Russia’s import restrictions. Russian sales in 2014 plunged 32% to €258m. Under normal conditions, sales would have exceeded €400m.The import embargo led milk destined for Russia to be processed into industrial butter and milk powder for world markets at a time when the prices were at all-time lows.

The Finnish farmer-owned co-op had grown its Russian market so much so that by 2013, it was the company’s biggest export market, accounting for 49% of exports. Exports of Finnish Valio dairy products totalled €450m in 2014 and Russia accounted for 37% of this total, or about €166m.

Overall group sales at Valio for 2014 were back 3.9% to €1.95bn. Sales decreased by 9% in international markets, driven by the Russian ban. Sales were back 0.8% in Finland, due to immense competition.

This saw its market share in basic milk fall below 30% because the company is not permitted to engage in price competition. 47% of the cheese consumed in Finland was imported, and Valio is now the only major domestic player making cheese from Finnish milk in Finland.

The price paid for raw milk stood at 45.4 c/litre, which was back 2.1 c/litre. However, a record first half softened the effect of the collapse in the latter half of the year.

Valio, with 15 production plants in Finland, processed 1.93bn litres (7,100 producers) last year, an increase of 2%.

Valio paid Finnish milk producers €885m, down €22m on the previous year. The milk margin (an indication of profits), which excludes depreciation, interest on shareholder loans and the price paid for milk, fell 5% to €974m.