The total of the farmers’ net sales decreased compared to the previous year due to the fall in the price paid for raw milk.
The price paid for raw milk stood at $0.427 (€0.385)/liter. While this was down from the $0.504 (€0.454)/liter the previous year, the company says this was a higher price than the EU average of $0.423 (€0.381)/liter.
Net sales decreased
Valio net sales for 2015 (year ending December 31, 2015) decreased by 11.9% on the previous year, to stand at $1.91bn (€1.72bn). Net sales fell by 12.3% in international markets and 11.7% in Finland. Exports and international operations accounted for around 35% of net sales.
In 2015, Valio paid its owner entrepreneurs $820m (€739m), which was 43% of net sales, however, this was down $162m (€146m) on the previous year.
Oversupply and imports
The cooperative said abolition of EU milk quotas led to overproduction, resulting in a global excess of supply over demand for dairy products. The decrease in demand was caused by factors including the Russian embargo and weakening consumer purchasing power in Asia.
Oversupply depressed global milk prices, which affected Valio in terms of low export prices, and the company said there was an increase in cheap imports and tough price competition on the Finnish market.
Finland produces roughly the same volume of milk as it consumes in the form of dairy products. However, as the share of imported dairy products has continuously increased, for Finland to remain self-sufficient in dairy the country has to be able to export a volume equivalent to imports.
Consumption of products made from Finnish milk also decreased. The share of imported cheeses exceeded 50%, and the figure for imported yogurts stood at just under 30%.
New export markets sought in 2016
Valio says that its competitive advantages in the Finnish markets and in exports are its innovative products, the EU’s cleanest raw milk, and its traceability.
Valio is Finland’s biggest food exporter and sells products to nearly 60 countries. Its share of Finland’s dairy product exports was around 97% in 2015, and the company is exploring entering new export markets.
In Denmark, Valio says, it will grow business in the lactose-free products category.
Global export markets are being developed, working together with industrial customers, and the cooperative’s goal is also to develop new consumer product markets.
Valio has subsidiaries in Sweden, Denmark, Russia, the Baltic States, the US and China. The company runs manufacturing operations for local products in Russia (a processed cheese plant) and Estonia (a cheese plant and dairy). In Estonia, Valio is the market leader or number two in all product categories.
In China, Valio is a supplier of demineralized whey powders with its Valio Demi range used as ingredients in baby foods.