Although the U.S. does not export significant amounts of dairy to Russia any longer, Russia’s ban on all agricultural products from the West including dairy could disrupt global dairy markets. Russia is the world’s number one importer of butter and the world second biggest importer of cheese, importing 89,844 tons and 326,770 tons respectively last year. Thirty percent of the imported butter and 80% of the importer cheese was shipped from the EU according to the U.S. Dairy Export Council. This market displacement for EU dairy products could prompt the EU to seek alternative markets that are currently served by New Zealand and the U.S. The EU will likely look to two of the U.S.’s biggest cheese markets, South Korea and Japan to absorb its cheese exports. New Zealand, and South American suppliers should have no trouble meeting Russia’s butter needs but cheese poses more challenges. It would take the total cheese exports of New Zealand, Argentina, and Brazil to make up for the loss of EU cheese. In the short term EU dairy prices could fall as a result of the ban and U.S. prices would follow, but in the long term global dairy supply and demand should remain unchanged.
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