WELLINGTON, September 24. /ITAR-TASS/. Russia’s ban on produce from Western countries has generated a 2.5 billion-liter global milk surplus, New Zealand’s Fonterra, the world’s largest dairy exporter, said on Wednesday.

“The question is what is the new home of that milk,” Theo Spierings, Fonterra chief executive, told the Financial Times newspaper.

“It depends on what products people will make and that will have an impact on prices," he was quoted as saying. Global milk prices had already fallen by more than 40% in 2014 from record highs last year, the report said.

Strong production globally, high inventory levels in China and a supply glut caused by Russia’s ban on milk imports from the European Union had prompted the decline, the newspaper added.

The New Zealand dairy giant on Wednesday lowered its forecast cash payout to farmers to $4.3 per kilogram of milk solids for the 2014-15 season. The figure is the lowest proposed milk purchase price in six years.

Russia banned imports of meat, fish, dairy, fruit and vegetables from the United States, the 28-nation European Union, Australia, Canada and Norway for 12 months at the start of August, retaliating for Western penalties over events in Ukraine.

Combined with other import bans imposed earlier this year, the latest trade measures cover Western imports worth $9.1 billion in 2013, according to Russian customs data.