In response to Washington-inspired sanctions imposed by the West Russia banned food products from the European Union, the United States, Australia, Canada and Norway. The embargo affects the import of beef, pork, poultry, fish, fruit, vegetables, cheese, milk, and other dairy products. Those who initiated anti-Russian sanctions continue to suffer growing losses. Having become hostages of the EU myopic policy, European companies lose profits and have to fire their employees to fill the ranks of European unemployed. Valio, a Finnish dairy producer, is a good example. Recently it has announced one more round of job cuts.
The company is owned by 18 dairy co-operatives with over 9000 milk farmers as members. It mostly produces dairy products such as cheese, powdered ingredients, butter, yoghurt and milk. Valio, the biggest national producer, accounts for around 80% of Finland's milk (2 million tons a year). The company’s net turnover is around 2 billion euros. Valio boasts some 15 production plants providing jobs to about 30 thousand people in urban and rural areas. Farms and factories are spread across the whole country. It’s very important for such a country as Finland with its roots not in the capital and big cities but rather outside densely populated areas – rural lands and provinces. The company has its own research and development center to conduct comprehensive studies of market and food related problems.
* * *
Without Russian exports the production has gone down since August followed by personnel cuts. In this regard the company has made a decision not to prolong 126 temporary employment contracts and to send about 800 people on unpaid leave. Now Valio will begin negotiations on reduction of the personnel on October 8. From 140 to 210 people could fall victims to cuts. Earnings-related unemployment allowances are usually paid for up to 500 days only. To receive the basic unemployment allowance – 24, 51 euro per day – one has to be on the payroll at least 10 months during the recent two years. It’s better for trade union members as they get payments from insurance funds. Valio is only one Finnish company which has business in Russia and there are 600 more employing over 60 thousand people. In early 2014 the unemployment rate in Finland was 8, 2%. As a result of sanctions it is expected to go up to around 10% by the end of the year.
These are hard times for 7,900 milk farmers who are members of 18 dairy cooperatives Valio is owned by. As milk exports to Russia had been on the rise many of them got loans to expand the production. Now half of their production is left without demand and there is no money to make repayments to banks. Bankruptcy is looming for many producers.
The aid promised by the European Union is not coming as yet. Anyway it’s just a drop in the sea of inflicted damage. Overall 290 million euros are earmarked by the EU for compensating the producers’ losses. No aid for paying off credits is envisaged at all. Farmers are left on their own.
On October 2, Finnish Yle 2 radio made public the economic forecast prepared by Pellervo economic research institute (PTT). Experts say chaos has hit the Finnish food market as a result of Russian embargo. Cheap food imports from EU countries such as meat and dairy products are flowing into Finland strengthening the market competition and leading to a projected drop in food prices in the coming months. According to Pellervo, not only will the price of food fall this year, but 2015 will see a considerable slowing in price rises compared with the general pricing trend. PTT says Finland is in for hard times.
Talking about the Russian retaliatory measures to counter the West’s sanctions, Finnish experts say Finland is the hardest hit EU member. The situation is exacerbated by the fact that the European market is oversaturated and the prices go down across the entire continent.
* * *
The people of Finland realize the anti-Russia sanctions have proven to be useless. They have failed to meet the West’s expectations. Speaking to radio Yle on September 17 Professor Martti Koskenniemi of the University of Helsinki said he believed that all attempts to influence Russian by imposing sanctions were doomed. According to him, more attention should be paid to finding a way out of the difficult situation than to the issue of Ukraine.
Some members of cabinet appear to hold the same opinion. For instance, Foreign Minister Erkki Tuomioja said Russia would respond in case the sanctions regime is toughened. He did not believe further sanctions are necessary. No matter the cabinet supported the sanctions after long and vibrant debates, Tuomioja expressed his personal opinion which is different for the majority of government members.
Esa Luomanperä, a joint stock company director, warned about problems to emerge in case export is stopped. In Finnish maalaisjarki does not exactly mean common sense. The word has a special meaning hard to convey with the help of literal translation. It is related to the notion of reasonable thinking and practical wisdom – a kind of pragmatic mentality typical for peasants. Maalaisjarki is what Esa Luomanperä alludes to when he says that Western politicians should be able to look ahead a bit, «The ongoing trade war is like a chess game. And it takes two to play chess»…
Meeting Finnish President Sauli Niinistö in Sochi on August 15 Russian President Vladimir Putin said, «The European Union’s sanctions have jeopardized the whole range of Russian-Finnish trade and investment ties». Isn’t it the right time for Helsinki to remember the words of the Russian President and make right conclusions?