Poland’s leading grocery chains recently began selling butter for PLN3 (US$0.68) per package, the lowest price in years. Butter prices in the Polish dairy sector increased by 20% in 2022, with certain product categories exceeding PLN10 (US$2.26) per package. Dairy firms have warned that by decreasing retail pricing, retailers are eroding profits across the supply chain.
“Nobody considers how such pricing would effect farmers,” Waldemar Bro, head of the National Organization of Dairy Cooperatives, told Money. “Over the previous two years, the price has been at or near the European average. But, not only has the price of butter decreased.”
Despite rising production costs, last year was reasonably favourable for Lithuanian dairy enterprises, according to Dalius Trumpa, CEO of Lithuanian dairy company Rokikio Sris. “Unfortunately, it has already passed us by. Dairy product prices are not merely declining this year. They’re crumbling.”
On January 24, a group of dairy firms addressed an open letter to the Polish Agriculture Ministry’s Henryk Kowalczyk, requesting that authorities interfere in the market. The authors cautioned that the sector was on the verge of collapsing owing to a sharp deterioration in market circumstances in Poland and other Central and Eastern European regions.
Another Polish dairy sector association, Dairy Forum, stated in January that local dairy firms were under rising pricing pressure from retail chains. Retailers, in turn, are thought to be concerned about a continuous reduction in sales of the most popular dairy products in recent months.
Exports are under attack.
In general, the price decrease is a worldwide trend. In recent months, the price of exported cheese in important overseas markets has fallen from €5 to €4 per kg.
Polish dairy producers have also warned of a decline in the worldwide price of a variety of dairy products such as powdered milk, butter, powdered whey, and cheese. Bro voiced worry that “prices are decreasing every day,” which might harm Polish dairy exports.
To some degree, the decline in worldwide pricing may be ascribed to fewer Chinese dairy imports in recent months, according to Polish dairy producers, who note that China is the world’s biggest consumer of dairy products and controls the price dynamics on the global market.
