[ad_1]
Eimantas Bičius, director of the Lithuanian Association of Dairy Producers (LPGA), assures that milk purchase prices have been falling since the beginning of April, and in early May the price has decreased further.
“In recent months, milk purchase prices have been falling since April 1. About 2-3 ct / kg, the same amount has fallen since May 1.
For cooperatives that buy milk from their members and then sell it to processors, the price, compared to March, is May 1. it has dropped around 8 ct / kg, which is around 25-27 percent, ”says E. Bičius.
Although the price of raw milk is falling, the latest data from the Center for Agricultural Information and Rural Business (ŽŪIKVC) shows that the average retail prices of most dairy products in large Lithuanian chain stores do not change or change alone very lightly.
“It is difficult to predict how retail prices for dairy products will change, as they often do not correlate with the situation in wholesale and global markets, where dairy prices are falling.”
For example, retail butter prices in our country have been the highest since 2016, although wholesale butter prices in Lithuania and other EU countries are declining.
The increase in retail price is related to the increase in the share of retail trade in the butter price chain. This share in the retail butter price structure has increased steadily since 2018. Fourth IV. Dairy product prices are likely to remain stable with a slight downward trend, “explains Dovilė Grauzdytė, specialist in the Market Information and Economic Analysis Division of ŽŪIKVC.
According to representatives of the Ministry of Agriculture (Ministry of Agriculture), according to their data, retail milk prices have not changed since the beginning of the quarantine, butter fell 1.46%, cheese also fell 1.64 %, sour cream increased by 0.35%, most increased. lean curd – 3.26 percent, kefir – 2.74 percent.
The price of the raw material does not significantly affect the price of the products.
According to E. Simonis, director of the Milk Center, the market dictates the dynamics of milk purchase prices: every spring the price drops due to seasonality, when milk quantities increase, the fat and protein content in milk. The purchase price is also affected by global trends due to the negative consequences of the coronavirus on world markets, where the prices of raw milk and products are falling.
“Lithuania depends on exports, as more than half of its production is exported. Exports of Lithuanian dairy products fell sharply. Its own challenges in the internal market also contribute.
Dairy product sales fell due to declining consumption as closed restaurants, hotels, kindergartens and schools do not buy dairy products during quarantine, which is about 20 percent. total internal consumption “, explains the head of the Dairy Center.
According to him, the price of the products cannot change exactly as much as the price of the raw material changes, since it is only a part of the price of the final product.
“It is necessary to separately evaluate the operating costs incurred by each market participant during the entire dairy production cycle, from the production of raw milk on the farm, its processing into cheese, butter, curd and other products to the appearance of products dairy on our table, “says E. Simonis.
According to ŽŪIKVC specialist D. Grauzdytė, analyzing historical information on the purchase of raw milk and the wholesale and retail prices of dairy products in 2017-2020. Fourth I During the period, it can be seen that they remain more or less stable with some small fluctuations. Although the changes in the purchase prices of raw milk during the year are significant. Therefore, the drop in raw milk prices still does not mean a significant decrease in dairy prices in stores.
“The structure of retail prices for dairy products is made up of raw milk producers, wholesalers (processors), retailers and parts with VAT. Each of these parts can affect the price.
For example, in 2020. In the first quarter, the participation of the raw milk producer in the percentage structure of the consumption prices of milk and Tilsit cheese increased, while that of the wholesale trade (processor) decreased.
The opposite trend is seen in the retail price structure for butter. During the period analyzed, the participation of the raw milk producer decreased, while that of the wholesale trade (processor) increased. Retail trade participation in the percentage price structure increased in all dairy price chains ”, D. Grauzdytė shares his ideas.
The representatives of the Ministry of Agriculture also point out that the price of the raw material does not significantly affect the price of dairy products.
“There are no significant fluctuations in retail prices in the domestic market due to changes in purchases of raw milk. In the domestic market, retail prices for dairy products depend more on the purchasing power of consumers and the market structure established ”, comments the Ministry of Agriculture.
Processor dependent manufacturers?
LPGA Director E. Bičius argues that milk producers depend on processors and merchants, have no choice but to comply with the dictated rules, and some eventually have to withdraw from raw milk production.
Milk
“The milk buying market in Lithuania is controlled by processors and traders, milk producers have no bargaining power here. Processors say a few days before the beginning of the month that the virus has lowered world dairy prices and that they cannot pay more for milk.
Dairy farmers cannot store raw milk, they can only store it in the refrigerator for up to two days, which is used by processors. For dairy farmers, the purchase price of milk has been relatively low in recent years compared to higher costs for food, supplements, services, and staff maintenance.
As a result of the situation, revenue will now drop further to 20%. Part of the milk producers do not see the future in the attraction of milk production ”, says E. Bičius.
According to the representatives of the Ministry of Agriculture, the reports of the milk purchasing companies show that the price of milk decreased between 15 and 40 euros per ton in April, and by mid-May it will be clear what the purchase prices of milk were in April.
“It should be noted that during this period the summer season begins, the quantity of milk purchased increases and the purchase price of milk has generally decreased due to seasonality.” However, this year the situation due to the COVID-19 virus, instability in export markets, interruption of supply chains still have the greatest impact on falling prices, “comments the Ministry of Agriculture on the situation. .
According to data from ŽŪIKVC, in March of this year. In Lithuania, the average purchase price of raw milk with natural fat content was 310.86 euros per tonne (excluding VAT) – 0.19 percent. lower than in February, but 1.73 percent. higher than in 2019. March.
According to preliminary data provided by Lithuanian milk purchasing and processing companies, in April this year, compared to March, the average purchase price of raw milk with natural fat content should decrease by approximately 9.7 per hundred. Meanwhile in 2019. In April, compared to March of the same year, the average purchase price of raw milk with natural fat content in Lithuania decreased by approximately 1.37 percent. (up to 301.36 euros per ton).
Develops support schemes for the dairy sector.
According to representatives of the Ministry of Agriculture, the Ministry is working intensively on possible support schemes for the dairy sector, communicating with representatives of the dairy sector about possible scheme projects, but it is important that all support schemes are coordinated with the European Commission (EC). activated.
“Already on May 7. Private storage support for skimmed milk powder, butter and various cheeses is launched. This support is not intended directly for milk producers, but allows to temporarily reduce the supply of dairy products on the market and, therefore, it supports the prices of milk and dairy products, “says the Ministry of Agriculture.
Dairy farmers organized a symbolic protest against such EC support for private storage of dairy products. During the campaign, milk flour was spread in a farmer’s fields, to signal that measures to manage the current crisis should be more effective.
The report released by LPGA states that the situation in the Lithuanian dairy sector is currently critical. The price paid to farmers for raw milk has fallen to record lows. For the temporary crisis management measure proposed by milk producers to be successful, it must be implemented in a coordinated manner across the EU, and farmers must be adequately compensated for the temporary reduction in milk production.
It is stated that to manage the crisis in the dairy sector, it is necessary to take measures that directly reduce the quantity of raw milk. The EU cannot support the storage of butter and milk flour and subsidize the storage of products already produced.
Dairy farmers protest
“Products in warehouses continue to be part of the supply chain and therefore reduce the price of raw milk accordingly. The proposed € 30 million is preferable to a milk reduction scheme rather than private storage “LPGA said in a statement.
According to the representatives of the Ministry of Agriculture, more measures are being taken: the legal acts that regulate the procedure to provide guarantees to the UAB Agricultural Loan Guarantee Fund are being modified. The legislation is also being changed 100%. both interest and collateral compensation for economic operators currently covered by aid legislation, who obtain short-term and biological asset loans, as well as loans for investment financing and leasing.
The European Commission has increased progress: from 50% to direct payments. at 70% and rural development payments of 75%. Up to 85%, farmers will receive these advances from mid-October.
[ad_2]
