Embargo costing dairy producers €7-9m in monthly losses

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Estimates by the Rural Consulting and Education Center (LLKC) show that Russia’s food imports embargo against the EU has caused milk prices to plunge, while Latvia's dairy farmers and processing plants are losing between €7 million and €9 million per month, reported LSM Tuesday.

LLKC calculated the current production costs per kilogram of milk to average €0.27, though the price varies between €0.22 and €0.35, depending on size of facility and herd, as well as milking effectiveness.

LLKC board chairman Martins Cimermanis predicted that the situation was unlikely to improve in the near future.

“We can say this is the make-or-break moment for the continued existence of the sector. At current wholesale prices dairy farmers may not be able to last more than six to ten months,” he warned.

The scenario could indeed lead to a situation where farmers choose to liquidate their herds before the next winter season, Cimermanis went on to say.

Unofficial sources suggest the European Commission is preparing a €20m compensation package to farmers in the Baltic region and Finland, however experts say the amount is rather modest. Moreover, no further information has officially been released regarding when, to whom and how such compensations might be worked out.

Cimermanis said that “this slow action on the EU’s command bridge and foggy notions of aid mechanisms to countries nearing a real crisis is completely incomprehensible.”

So far the only help Latvia’s dairy farmers and processors have received came as a €6m grant to cover 70% of costs of breeding herds’ productivity control testing from the government.

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