Lithuanian dairy industry in financial crisis

27-10-2023 | |
Milk production dynamics in Lithuania this year is expected to drop by only 3%. Photo: Canva
Milk production dynamics in Lithuania this year is expected to drop by only 3%. Photo: Canva

Dairy farms are going bankrupt as the financial aspect across the industry remains tough, Jonas Vilenis, chairman of the Lithuanian Dairy Farmers Association, outlined at a Parliament session.

In 2023, the industry saw a slump in income by roughly €120 million compared with the previous year, he estimated. Nearly 3,000 farms were driven out of business by adverse market conditions, and the country’s dairy herd shrank by 7,600 cows.

“Dairy farming is in turmoil. We are witnessing a profound crisis,” Vilenis said, adding that there are huge fears that things could deteriorate in the coming months as a large portion of farmers have not stocked up on sufficient feed due to drought in the country.

Milk production in Lithuania this year is expected to drop by only 3%. However, dairy processing plants in the country could be hit by a fully-fledged supply shortage after a huge dairy plant is opened in neighbouring Estonia, Vilenis said.

EU state aid criticised by dairy sector

At the end of August, Kestutis Navickas, Lithuania’s agricultural minister, unveiled that the EU state aid of €10.66 million was due to be paid only to farmers who sold their milk for less than € 0.40 per litre in April-June 2023.

However, the Lithuanian Competition Council criticised this scheme, as many farmers are not eligible for state aid. Some market players warned that big players will be left out since they manage to sell their products at slightly higher prices than small operations.

Milk processors in Lithuania have called on the government to increase support for all dairy farms, the Association of Lithuanian Milk Producers reported. In their opinion, to ensure the dairy industry’s sustainability, government support should extend not only to small but also to medium and large farms that have the potential to increase milk production.

Lithuania exports nearly 70% of dairy products but is becoming highly dependent on raw milk imports. In 2023, Lithuanian dairy plants will source roughly 30% of milk abroad. It is estimated that 11,600 milk farmers are registered in Lithuania. They keep around 202,800 cows.

Dairy farmers in Lithuania have been protesting since the beginning of the year. Dairy businesses were outraged by a lack of government reaction to the crisis in the industry and demanded subsidies of €40 million to cover the losses in 2023.

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Vladislav Vorotnikov Eastern Europe correspondent
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