Danone shifting 5,000 cows from Russia to Siberia

MOSCOW: President Vladimir Putin’s ban on European Union cheese imports has driven up milk prices in Russia by so much that French yogurt maker Danone is transporting almost 5,000 cows to a farm in Siberia to ensure it has an affordable supply.

The Holstein cows were travelling as many as 4,500km in trucks from the Netherlands and Germany, boosting the herd on a farm near the city of Tyumen, according to Charlie Cappetti, head of Danone’s Russian unit. That should protect the company from the increase in raw milk prices, which were up 14 per cent this year, he said.

While the French dairy firm doesn’t normally invest in agriculture, it made an exception for Russia. After Putin’s ban on dairy imports took hold in 2014, demand for milk surged as local cheesemakers rushed to replace French camembert and Italian pecorino. That has exacerbated the inflationary effects of the ruble’s weakness.

Danone had invested in the 60ha farm with local producer Damate, said Cappetti. The first cows started to provide milk for Danone in May, and a final shipment of cattle is due to arrive in September.

The difference between supply and demand is narrowing as new milk is coming to the market, including from the Siberian farm.

Sales in Russia had been growing in line with inflation in the first half and should rise next year, he said. Bloomberg