The current crisis in the Latvian dairy industry is expected to end in the next few months, when wholesale prices for raw milk should rise to €0.40–€0.50 and production costs will drop from their peak in 2022, said Janis Sholks, chairman of the Latvian dairy union, to local press.
The Latvian dairy industry is very dependent on how the European market is doing as a whole because 65% of the milk produced in Latvia is exported as raw milk or as dairy products.
“At the moment, there is too much of everything in Europe,” Sholks said. “This includes a large stock of butter, dry powder, and technical dairy products.” Sholks also admitted that the supply is currently higher than the demand on the key sales markets, which is making prices go down.
The dairy industry in Latvia is getting used to price changes. Early in 2022, wholesale raw milk prices were also low, but they went up a lot over the next few months. This made dairy companies profitable again, so they could start paying back their loans, said Guntis Gutmanis, chairman of the Latvian Council for Cooperation of Agricultural Organizations.
This didn’t last long, and the price has once again dropped below what dairy companies are comfortable with. At the moment, Latvian milk farms feed their cows with the expensive harvest from the middle of last year, because the current prices, which are a bit higher than those from the middle of last year, don’t cover the costs of production.
In the meantime, the Latvian association of agricultural statutory societies has asked Didzis mits, the minister of agriculture, to get involved in the dairy market to make sure that the price of buying milk is at least the same as in Lithuania, which is close by. Farmers in Latvia were worried that businesses can’t stay in the red for long and that the current crisis could put many farms out of business, which would help competitors in neighbouring countries.
The head of the state support department in the Latvian Agricultural Ministry, Zigmars Kinkns, said, however, that the government would not step in to set prices. He said that the wholesale milk price goes up and down in a way that is called cyclical, and that this happens several times in a year.
Sholks estimates that there are 5,000 milk-making businesses in Latvia now, compared to 14,000 a decade ago.
