Russians food embargo has ‘serious consequences’ for Australian dairy

MURRAY Goulburn chief Gary Helou says the Russian embargo will hit Australian dairy hard.

Murray Goulburn chief executive Gary Helou shows Prime Minister Tony Abbott the dairy co-operative’s new plant at Laverton North in Victoria. Picture: Gregory Scullin

RUSSIA has introduced a “full embargo” on most food imports from Australia, the EU, US and other Western countries that imposed sanctions against Moscow over its policy on Ukraine.

Gary Helou, chief executive of Australia’s biggest dairy company,Murray Goulburn, last night warned that the Russian food ban would have grave consequences for Australia’s dairy industry.

Russian Prime Minister Dmitry Medvedev said the embargo, introduced yesterday, would affect imports of beef, pork, fruit and vegetable produce, poultry, fish, cheese, milk and dairy products from the EU, US, Australia, Canada and Norway.

The ban comes after a decree on Wednesday by President Vladimir Putin on countermeasures to Western sanctions.

Mr Medvedev said Russia was also considering banning Western carriers from flying over Russia on flights to and from Asia.

Foreign Minister Julie Bishop said the embargo was “disappointing” but assured Australian agricultural producers the government would do “everything in its power” to minimise the effect through new trade agreements and the opening up of alternative markets for their produce.

“It is disappointing that Russia has acted in a retaliatory manner rather than respond to international concern by halting the supply of heavy weapons to the separatists, including the surface-to-air missile systems believed to have been used in the downing of Malaysia Airlines flight MH17 that resulted in the tragic deaths of 38 citizens and residents of Australia,” Ms Bishop said last night.

Yesterday’s embargo went into effect immediately and will last a year unless “our partners demonstrate a constructive approach towards co-operation” with regard to sanctioning Russia, Mr Medvedev said.

Mr Helou said Australian dairy exports to Russia were growing fast, and were expected to pass the $100million market value this year.

Murray Goulburn products - mainly butter, cheese and some milk powder make up about half of the Russian order.

Mr Helou said it was particularly galling that Australian dairy imports had been banned, but not New Zealand products.

“Russia is a very important dairy market for us; as important as China, so this is going to take a little while for us to get our heads around its impact,” Mr Helou said.

“There will be very serious consequences for us.

“In Russia, we are going to see New Zealand get a leg in to fill the vacuum, and I don’t like that.

“But the other impact will be that in our major export markets, we will now see increased completion from the other dairying countries and regions such as in Europe who are also affected by the Russian ban; they will be looking to sell their products elsewhere and that’s going to make life harder for us all around.”

The one dairy product that has been exempt from the Russian ban is infant and baby milk formula.

A Meat and Livestock Australia spokesman said that with exceptional demand for Australian beef and lamb this year from customers around the world, especially China, they did not believe the latest Russia ban would have any impact on cattle and sheep prices paid to farmers.

According to European Commission figures, exports of food products to Russia were worth $7.4 billion in 2013. Australia exported $405 million worth of food and agricultural products to the country. The bulk of the exports were meat, livestock and animal products, worth $310m.

Additional reporting: AAP