March 17, 2005

Finnish dairy industry to compete with cheap imports from new EU countries

The Finnish dairy industry is facing tough competition from the new EU countries.

This year, some 33 percent of Edam, the favourite cheese of the Finns, came from countries such as Poland, Germany, and Denmark. The cheap Polish Edam is definitely a contender to the Finnish version.

Finnish dairies also find it impossible to compete with their Polish rivals, as milk in Poland is 50 percent cheaper than in Finland.

Even in Germany, the production cost of milk is a third lower than in Finland. The Finnish dairies' cost-effectiveness has already been maximised, but Finland still falls short.

The fate of Milka Dairy in Pedersöre in Western Finland could provide a clue to such high costs. Last year the dairy's production reached a record-high 22 million litres of milk, two thirds of which was then processed into cheese at the Kaitsori cheese production unit.

Problems started when the current consumer goods central organisations running Finland's major retail chains informed Milka that its EUR 4.95 per kilo price tag was too high. Grocery stores were selling Polish Edam for EUR 3.95 per kilo.

Milka did not have a choice but to join forces with competitor Valio. Milka's own dairy was shut down and its equipment is being sold piecemeal to Russia, where it will be re-assembled.

Milka was turned into a supplier co-operative, the role of which is to collect milk for Valio's dairies. Thirty-three employees were laid off and the Milka consumer brand has ceased to exist.