Dairy prod­uct prices not ex­pected to de­cline in Latvia soon

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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.

Ieva Čīka/LETA

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