Latvian Agricultural Minister, Didzis Šmits, and Lithuanian Agricultural Minister, Kestutis Navickas, have disclosed their plans to jointly apply to the European Commission for urgent support of dairy companies in their countries.
The announcement comes on the backdrop of reports indicating that the crisis in the Baltic region’s dairy industry is deepening further.
The crisis in the dairy industry equally affects Latvia and Lithuania, so common solutions should be put together for the entire Baltic region, the Latvian Agricultural Ministry said in a statement on its website.
During the past few months, Baltic farmers have been urging the authorities to take some steps to save their operations, which they say are in dire conditions due to high production costs on the one side and low wholesale prices on the other.
Janis Irbe, chairman of the board of the Council of cooperation of agricultural organisations, estimated that the wholesale price of raw milk in Latvia stood at €0.2 per litre, nearly half of the price farmers currently get in other European markets.
In the midst of this, some farmers are threatening to boycott local dairy processors in a bid to force them to offer more attractive prices.
Janis Šolks, chairman of the Latvian Dairy Owners’ Central Union, in turn, told the local press that “the dairy industry has reached a point where it is no longer profitable to manufacture dairy products in Latvia”.
In February, the Council of cooperation of agricultural organisations, one of the largest unions of farmers in Latvia, called the authorities to lower VAT on dairy products. The decision on this matter is still pending.
“Reducing VAT on dairy products would be an important step that would help farmers survive the difficult situation and save their farms. In addition, VAT reduction can be a flexible solution in times of crisis,” commented Guntis Gutmanis, chairman of the Latvian food trade association, which backed the proposal.
In addition to the European Commission’s aid, Baltic countries’ governments are also considering allocating some funds to the dairy businesses from their national budgets. Šmits said that Latvian authorities put together a comprehensive programme aimed at supporting milk farmers.
He disclosed that funds to support farmers would need to be reallocated from other sectors, and additional money would have to be requested from the state budget if the crisis continued for at least another 2 months.