Bread price up, quality down due to energy prices in Latvia, say experts

The rapid price increases of energy resources, minerals, and plant protection products also have a significant impact on the cost of grain cultivation. In the long term, this will also affect grain quality, and bread quality is likely to change, Latvian regional television ReTV reported on October 17.

Ivars Stanga, owner of the Straumēni farm in Dobele municipality, said that he couldn't complain about the quantities this year, but wheat quality is not as good as in other years. The production is exported, but before that it sits in the drying plant, working on diesel. The cost depends on the humidity of the grain, but the drying plant is a necessity, said Stanga.

Co-op Latraps Board member Ģirts Ozols said that the salvation is that grain has managed to grow relatively dry, without exceeding base humidity, and without overspending oil gas, with which most of the co-op's drying plants operate. However, the price of oil gas has also become twice more expensive.

“This year before the season, respectively, we increased tariffs by 30%, which relatively covers increases in energy prices, but we also did not reflect an increase in labor costs that remains uncovered,” Ozols said.

The cost of drying was only a small part of the increase in production costs for grain growers. The majority is composed of fertilizers and plant protection products.

“And these costs have climbed very much, at least three times. If the fertilizers used to account for 20-30% of all costs, they will now be close to 80%, because it is very difficult, and given that there are very many risks, the farmer cannot be sure to grow enough tons to cover costs, and the risk remains far more serious that the next year could be very problematic,” said Ozols.

The rapid rise in costs will also have a significant impact on the price and assortment of bread in shops, said Ingūna Gulbe, head of the Agricultural Market Promotion Center.

“For us as bread buyers, the biggest problem will not be the price of grain, the price of flour, but the other costs. It's more energy prices—gas, electricity, because to bake bread [..] In September, it could be seen that bread was already significantly more expensive than in the previous periods because all the time in the big shop chains, there was an option for both white and rye bread under one euro, now it doesn't exist anymore," Gulbe said.

Gulbe hopes that price increases for basic products could ease in the spring. This is not likely to be linked to a reduction in the cost of production, but rather to a reduction in the purchasing power of the population. In the meantime, farmers say they will think carefully about sowing some crops.

“Fundamental crops, of course, will remain, but the fact that productivity and production will fall in Latvia is clearly clear, because we cannot afford to use nitrogen-containing fertilizers so much, and this spring will be a challenge for the availability of this resource,” said Juris Lazdiņš, Chairman of the board of the Farmers Saeima.

Farmers say that the quality of grain will also change, and we are likely to no longer be able to be proud of the quality of bread which is also high at the European level. 

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