“Our first step following Russia’s invasion of Ukraine was to establish the safety of the team in Russia, and our priority through this process continues to be doing the right thing by our people,” said Fonterra chief executive Miles Hurrell.
“We then suspended shipment of product to Russia while we assessed the impact of economic sanctions and discussed our long-term plans with our customers and joint venture partner.
“Following careful consideration of the impact on our people and our long-term plans for the Russian market, we will now close our office in Moscow, re-deploying staff where possible, and withdraw from our joint venture Unifood.
The dairy co-operative, which is the world’s biggest dairy exporter and New Zealand’s largest company, last month suspended shipments to Russia following the invasion of Ukraine. Dairy products had accounted for the bulk of New Zealand’s exports to Russia, but the trade was small for Fonterra’s business, primarily of butter and accounting for less than 1 per cent of the company’s total exports.
Fonterra had seven staff based in Moscow and another 35 at the Unifood joint venture it operated with its Russian distributor Foodline in St Petersburg. The joint venture relied on products from New Zealand so had been operating with a skeleton staff processing products from its warehouse after Fonterra suspended shipments.
Withdrawing from Russia will cost Fonterra less than $10 million, which is not considered material for the business.
New Zealand has been exporting butter to Russia for more than 40 years, and Fonterra entered the Unifood joint venture in December 2018.