Dairy product prices not expected to decline in Latvia soon
Prices of dairy products in Latvia will either remain on the current level or increase even more in the next couple of months. With that, there is no reason to expect price decline in the near future, predicts head of Agriculture Market Promotion Centre Inguna Gulbe.
It was reported at the beginning of July that, following estimates from LTVC, dairy product prices have grown in the second quarter of 2017. For example, the price of sour cream with fat content of 25% has grown 11% during this period – from EUR 2.70 to EUR 3 per 1 kg. The price of cottage cheese with fat content of 9% has grown 82-82.5%. Kārums sweet cream with fat content of 10% has become 10% more expensive.
«Prices of dairy products started growing at the beginning of the year, but not all producers have increased prices. This is because contract conditions are not changed every month – it is a process that requires a lot of discussions. I think prices have not yet risen for all products. Prices will rise if milk procurement prices in the world do not drop,» says Gulbe, adding that dairy prices in Latvia do not currently have a trend to grow. With that, consumers should expect prices to remain on the same level or increase slightly.
Gulbe admits that prices of dairy products in Latvia have grown significantly this year. One of the reason is the milk fat prices because of the demand on the global market. «There was a time when people though fat and butter was bad for health, and that it safer to transition to vegetable fats. Now the popular belief is that palm tree oil is bad for health. It is popular to use the statement that there is no pal tree oil to promote products,» says Gulbe, adding that this has caused a surge in demand for milk fats. She explains demand for milk fats currently exceeds supply because until now milk fats have been considered unnecessary. Because of that, specific cow species were selected to produce more milk with higher protein and lower fat concentration. Now it is necessary to restructure everything to have cows produce milk with higher fat concentration. «Ghee butter is considered a very health product because it consists only of milk fats. At the same time, cows continue producing milk with high protein and low fat concentration. We will need years to transition to cows that produce milk with higher fat concentration,» explains Gulbe. LTVC manager explains that dairy products’ price rise was affected by the growing demand for associated products and milk procurement price rise as a whole. But it is hard to say how much prices have grown for different dairy product groups in Latvia. «Ever milk processing company aims to make sure overall balance is positive to secure profits. This way they decide prices of which products should be increased and which – should not be increased,» says Gulbe, adding that overall price increases have not been the same across multiple companies.