The dairy industry in Latvia is facing some serious challenges, with farmers grappling with low raw milk prices and potential bankruptcies looming on the horizon. In January 2024, Latvia had the lowest average wholesale raw milk price in Europe, with farmers selling milk for just €38.47 per 100 kg. This was almost 20% lower than the European average farmgate prices of €45.94.
Neighbouring countries like Estonia and Lithuania fared better, with farmers in Estonia receiving €43 for 100 kg of raw milk and those in Lithuania also getting better prices. The situation was even more favourable in Poland, where the average farmgate prices were at €47.43 in January. The stark difference in prices has resulted in Latvian farmers earning significantly less from selling milk compared to their counterparts in other countries.
The Latvian Livestock Industry Association (LSA) has raised concerns about the financial sustainability of dairy processors in Latvia, noting that many operate at a loss or just about break even. With little room for tariff increases in the near future, the industry faces the real risk of bankruptcies that could further strain the supply chain.
Factors contributing to the industry’s woes include soaring energy prices, expensive logistics and packaging, as well as the preference of Latvian retailers for cheaper imported products over local ones. This has led to a decrease in demand for Latvian dairy products, exacerbating the financial challenges faced by milk farmers.
In a bid to mitigate the crisis, the LSA has called on the government to increase subsidies for milk farms from €25,000 to €125,000 per farm. Farmers are also advocating for higher limits on duty-free diesel fuel imports, highlighting the need for affordable fuel throughout the year to sustain their operations.
A recent report by the Latvian Ministry of Rural Affairs highlighted a combination of environmental, political, and economic factors that have plunged Latvian agriculture, including the dairy sector, into one of its worst crises in history. In 2023 alone, Latvian farmers incurred losses amounting to €412 million, with cattle farmers bearing a significant portion of the burden at €129 million.
The situation in Latvia’s dairy industry serves as a cautionary tale, reminding us of the fragile balance that exists within agricultural sectors. The challenges faced by milk farmers in Latvia underscore the importance of government support, sustainable pricing structures, and market demand in ensuring the viability of the dairy industry.
As we reflect on the struggles of Latvian dairy farmers, it prompts us to consider the broader implications for the global dairy market. The interconnected nature of the industry means that disruptions in one region can have ripple effects that reverberate across borders.
In Australia, where the dairy sector also faces its own set of challenges, the plight of Latvian dairy farmers offers valuable insights. It highlights the importance of maintaining a resilient and adaptable agricultural industry, one that can weather the storms of fluctuating market conditions and external pressures.
As consumers, we play a crucial role in supporting local farmers and sustainable agricultural practices. By choosing to purchase dairy products from local producers, we can contribute to the economic viability of our dairy industry and help ensure the continued success of our farming communities.
The story of Latvian dairy farmers serves as a stark reminder of the fragility of agricultural economies and the need for concerted efforts to safeguard the livelihoods of those who work tirelessly to put food on our tables. It is a reminder that behind every carton of milk and block of cheese lies the hard work and dedication of farmers facing unprecedented challenges.
In the face of adversity, the resilience of farmers shines through, embodying the spirit of determination and perseverance that characterises the agricultural industry. As we navigate the complexities of the modern world, it is essential that we continue to support and advocate for those who form the backbone of our food systems.
In conclusion, the struggles of Latvian dairy farmers remind us of the interconnectedness of the global dairy industry and the importance of sustainable practices and government support in ensuring the viability of agriculture. By standing in solidarity with farmers facing adversity, we can play a part in building a more resilient and equitable food system for all.
