Local dairy producers predict wave of insolvency in Latvia

Take note – story published 1 year ago

Energy bills and milk procurement prices are currently a concern for dairy producers. The company 'Elpa' has just been declared insolvent. If there is no aid, a wave of insolvency is expected for small, domestically-oriented dairy producers, Latvian Television reported on September 12.

The second largest dairy processor in Latvia AS “Preiļu siers” consumes more electricity than the whole of Preiļi municipality. The company's chief executive and owner Jāzeps Šņepsts said that solar panels installed a year ago aren't enough. Comparing the prices of July this year and July last year, the company estimates that electricity and woodchips cost twice as much, three times more for gas.

“Preiļu siers” estimated that exporting dairy companies would survive. 95-96% of its production goes to the shelves of foreign shops, not Latvian stores. In the meantime, the Lazdona dairy company is committed to working primarily for the local market.

"It doesn't occur to anyone here, for example, not to milk cows or not to drive dairy products to schools and hospitals every day. We are determined to do this. Clearly, there is trouble for everyone. Dairy procurement prices are hardly able to follow up on sales prices," said Elvīra Utināne, Chair of the Board of Lazdona milk. Lazdona plans to join the Rimi campaign this autumn, which provides for fixed product prices.

The aid currently available to manufacturing companies will help to survive in the coming months but does not address the problem that has been growing since the beginning of the year. 

“Anyway, survival will have to be paid for. The worst-case scenario is that funds not obtained due to insolvency will have to be paid in unemployment benefits. The best way is probably to pay for the company to survive and earn in the future," said Jānis Šolks, Chairman of the Board of the Latvian Dairy Farmers Central Union.


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