Food prices will 'inevitably' rise in Latvia, say producers

The price of grain and cereals had been constant for years. Since the autumn of 2021, it has been soaring and reached the highest point in November and December. Food producers addressed by Latvian Radio on February 3 say that the increase in prices of final products will be unavoidable.

Price jumps have also occurred in the past when weather conditions have affected them. But this year, the price of the seed is being driven up by both its quantity and quality and the considerable rise in the price of grain on the stock exchange.

'The price of seed has an impact on the harvests, as it is one of the investments that the farmer has to take into account at the very beginning. It is logical that when a more expensive seed is planted the harvest price will rise,” said Aiga Siliņa, representative of producer company Baltic agro.

The fact that prices are rising for seeds of different crops was also highlighted by Linas agro spokeswoman, Dace Kazlauska: “For cereals and peas, it is around €110-120 [increase] per tonne against last spring's price. Beans [seed prices] have grown at about €370 a tonne. In principle, this is driven by an increase in the price of the cereal exchange. I think this will only be reflected in the autumn whether food prices will rise or not because now the farmers will have higher costs."

Kārlis Zemešs, Chairman of the Board of the Latvian Bakers Association, said that grain prices rose last autumn and have not fallen. Between September and November, the price of flour increased by 30%. Prices of other raw materials needed to produce bread and pastries are also still growing, and the energy price crisis too is affecting producers. “I think another rise in prices for food products is to be expected in the near term,” Zemešs said.

He stressed that competition among food producers is huge and consumption is declining at rising prices. Consequently, product prices are maintained at the expense of producers. Producers were hoping that they would be compensated for rising energy prices by the State.

The price of grain on the stock exchange is also felt by the grain processing company Dobeles dzirnavnieks. Its board chairman, Kristaps Amsils, stressed that the price of wheat exceeded a historic record this fall:

“The stock price reached even €310 per ton, which is more than a 50% rise against the previous year. This challenge is very great for us this year, because the price of the most important raw material has climbed and, at the same time, production has become more expensive, because all production-related costs, such as energy resources, as well as the increase in the price of packaging have been very rapid.”

Increasing the price of cereals on the stock exchange, as well as rising costs of other raw materials such as fertilizers and energy resources, increases in food prices will be inevitable but according to experts addressed by Latvian Radio, it should be gradual.

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