The European Union's recent package of sanctions against Russia for its invasion of Ukraine appears to be the first to directly target the dairy industry, notes DairyGlobal.

Technologies prohibited for export

The Russian milk producers' union, Soyuzmoloko, said European companies will now stop exporting centrifugal cream separators - equipment used to separate milk into skimmed milk and cream.

Several other goods, not exclusive to the dairy industry but widely used in milk processing plants, are also subject to restrictions, including heat exchangers, vacuum pumps, several types of transformers and other electrical equipment.

Import of equipment from other countries

The new restrictions are unlikely to dramatically deprive Russia's dairy business of Western technologies, Roman Chuybak, Soyuzmoloko's manager of interaction with authorities, told local news publication Dairy News.

"[Russian] business has already been under the restriction for a year, and most of the recently sanctioned goods of European origin were already extremely difficult or impossible to import into Russia," Chuybak said.

In light of these restrictions, Russian dairy companies have switched to alternative suppliers. For example, milk separators are purchased from Turkey, while other equipment is sourced from China and India, Chuybak said, adding that Russian companies have managed to replace a considerable part of European imports.

The penalties should not be underestimated

On the other hand, the impact of Western sanctions on Russia's dairy industry should not be underestimated, Chuybak said, warning that not all equipment can be found on alternative markets. As the list of sanctioned goods is expected to grow further, he predicted, the problems will "gradually worsen".

The Russian dairy industry could be further affected by Western sanctions – as of March 1, Turkish customs officials abruptly stopped allowing the transit of sanctioned goods to Russia through Turkish territory.

This allowed Turkish companies to re-export European goods to Russian customers. In Russia, several companies have admitted importing equipment through third countries, including Turkey, the United Arab Emirates and Kazakhstan, under a scheme known as parallel importing.