10 million litres of raw milk imported from Sweden per year

Producer prices have fallen dramatically in Sweden

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The Finnish dairy firm Arla Ingman has no plans to increase its importation of raw milk from Sweden in the coming years.
      The Swedish-Danish Arla Foods’ Finnish subsidiary Arla Ingman uses around 300 million litres of milk per year. According to managing director Robert Ingman, about three per cent of this is covered by milk imported from Sweden. This figure is likely to remain constant, Ingman says.
     
The import of milk from Sweden commenced three weeks ago. Raw milk is now shipped from Stockholm daily to be packed at the Hämeenlinna co-operative dairy in Finland.
      Arla Ingman has around 1,100 milk producers of its own, but this figure has been steadily decreasing for some years now. The message from the Valio Group dairies is the same.
      According to Ingman, the Swedish milk - the consumer price of which is 5-15 cents lower per litre than that of Finnish milk - is offered as an alternative to the Finnish consumers. It is mainly sold in the large S- and K-Group grocery stores in Southern Finland. The cartons state the country of origin of the product.
     
Milk shipped in from Sweden is processed into low-fat milk, skimmed milk, yoghurt, and butter. According to Ingman, there has been some negative feedback from the consumers with regard to the imported milk, but due to the strategic nature of the decision the imports will continue.
      The cheaper consumer price of imported milk results from the considerably lower producer price that is currently paid in Sweden.
      Arla slashed the paid producer prices radically the week before last. Depending on quality, the milk producers in Sweden earn a whopping15-20 cents less per litre than the producers in Finland.
      The producer price in Sweden barely covers the production costs.
     
The main reason for the low producer price is stalled exports. The weak economic situation has ruined the export of butter and milk powder in particular.
      Finland exports dairy products on a much smaller scale. Most of the production is aimed at the domestic market.
      Because of the devaluation of the most important export currencies, also Finnish Valio Group’s export revenue decreased and the producer price was lowered to close to 40 cents per litre.
      According to a competition authorities' decision, Valio is obligated to sell raw milk to its competitors at cost price.
      Last year, some 26 million litres of this 185-million-litre quota remained unused.
      According to Robert Ingman, his company has had to reserve a couple of million litres of the quota milk to spare, because a dairy company cannot risk having to inform the client stores towards the end of the year that it cannot supply the agreed amount of milk owing to the quotas having run out.
      According to Ingman, the Swedish milk adds to the margins and improves his company’s situation in negotiations with grocery store chains. “A store chain does not negotiate over five or ten million litre volumes. The contracts start from 30 million litres.”
     
Arla Ingman is Finland’s second largest dairy firm, with net sales in the region of EUR 300 million covering a fifth of the market.
      The parent company Arla Foods is Europe’s largest dairy product enterprise, owned by Swedish and Danish milk producers.


Previously in HS International Edition:
  Finnish dairy industry threatened by cheap imports from new EU countries (16.3.2005)
  Finland´s butter mountain of the 1980s has been replaced by shortage of milk (18.2.2008)
  Finland´s Ingman sells dairies to Swedish-Danish giant Arla (9.11.2006)

Links:
  Arla
  Arla Ingman
  Valio

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