Rising inequality in dairy sector in Latvia

There is currently a significant difference between the lowest and highest prices for raw milk procurement. Farmers estimate that businesses of the same size and expense have very different incomes, Latvian Radio reported February 10.

The lowest price of raw milk purchase in Latvia is currently around 27 cents per liter, while the highest is 47 cents. The data from the agricultural data centre show that there has been a significant difference between the two indicators since October, when the highest price of milk was rising rapidly, while the lower price has remained almost flat.

Latvian Radio addressed several businesses who currently have the lower price. They wanted to remain anonymous. One of the farms has a small herd producing 4 to 6 tonnes of milk per month. The farm receives 34 cents a liter for raw milk. The farm's representative said it is because of the remote location.

“We don't have such great opportunities. I know that there are only three purchasers in this parish who are actually ready to pick up milk here. And everyone pays a similar price, so we're where we are. But we are grateful they come at all. [..]“Let it be less, but the peace of heart is more important at the moment,” said the owner.

She said that the purchase price of 34 cents won't cover increases in feed, energy resources and fuel prices. “But we work other jobs in parallel with the farm,” she added.

The owner of another small dairy herd said that despite the high prices everywhere, the farm still received only 26 cents per liter.

“If you can get a lot more elsewhere [..] I realized it was not really normal anymore [to get a price below 30 cents]. I turned to the the management of the dairy purchaser and warned that I would go to somebody who offers a higher price [..] The price raised by 5 cents within an hour so I don't leave. At the moment, the price is 35 cents per liter. In all of this, I don't like companies having such an individual approach,” the owner said.

The owner concluded that the low price had not been due to quality problems or the location of the farm but to the attitude toward a small farm. “I would like those who buy milk to be more equal to all farmers. I don't like begging, because we want to expand as well, prices for fuel, animal feed have risen, and we can't make ends meet with low prices,” she said.

The association of agricultural incorporated companies has called the difference in milk prices a dangerous trend because income from dairy marketing holdings at the same size and similar costs can vary by around 43%.

Aija Kiserovska, a representative of the Latvian Association of Agricultural Cooperatives and the milk co-op “Viļāni”, explained that the quantity, quality of milk delivered and the distance to the farm are essential in determining the purchase price. At the same time, she pointed out that 27 cents per litre of raw milk is currently an almost impossibly low price, taking into account also increases in energy, feed, and fuel prices.

Jānis Šolks, head of the central union of dairy farmers, pointed out that the buying-in prices shall be based on the volume of milk delivered by the holding. A third of the milk shall be accepted from cooperatives, the rest of the milk holding shall be transferred directly or through collectors for processing. Šolks is convinced that there are few farmers getting the lowest price.

“The higher the volume of milk from the farm, the higher the price will be and the price will never be the same. This has been the case historically, and it is also the case at the moment,” Šolks said.

The information gathered by the agricultural data center shows that the majority of milk purchasers in Latvia, which buy at least 10 tonnes of milk, pay farmers below the average price. The center will collect raw milk purchase price data for January next week.

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