In the event of a shock, more vegetables and meat remain for farmers in Lithuania: will the prices of these foods change?

Delphi He was interested in the expectations of the different agricultural sectors of the country in the summer, what losses the pandemic caused and what solutions would allow agriculture to eliminate the damage caused during the quarantine.

Lack of modern storage facilities.

In the spring, some of the country’s vegetable growers no longer had a place to put their produce: after the borders were closed, the part destined for export remained in warehouses, and the latter were not adapted to store vegetables until the new harvest.

According to Zofija Cironkienė, director of the Lithuanian Association of Vegetable Growers (LDAA), there are more questions than answers.

“Will consumption return to the pre-quarantine level, what will be the situation with exports, because the contracts are concluded for next year, the producers had a dilemma, whether to sow or not to sow, how much to sow or force majeure? vegetables are in the dark, ”says Z. Cironkienė.

According to her, there were no ideas for farmers to increase the cultivation area, although there is generally a desire to increase cultivation a little each year. Anxiety prevailed this year over whether to plant or sell.

According to the interlocutor, there are no realistic assumptions that vegetable prices may change dramatically in the near future, and competition cannot be found anywhere.

“The borders with Poland have been opened and it is the biggest competitor. Especially this neighbor is geographically further south of Lithuania. As for spring, early vegetables, that competition is nowhere to be found and consumption is lower. therefore, the situation is not easy, “said Z. Cironkienė.

According to her, this pandemic has highlighted a major problem: the lack of modern storage facilities where cultivated products can be stored until the new harvest.

“For example, vegetables such as potatoes and beets had to be exported in March, if not properly stored, in mid-April these vegetables began to spoil.

The potatoes, if they are of good quality, are all sold today, retailers need them, the only problem is that there are large quantities of beets left, which the local market does not need as much.

Lithuania is a land of potato dishes, cold beets, so until the new potato harvest is necessary for public catering establishments that produce zeppelins, kugels or peas, or beets for cold beets. This year, these freezer products were successfully sold to retail chains, where purchases were higher than usual.

The question may arise why not all vegetable production was stored in freezers at zero or weakly positive temperatures. Because producers lack such storage and it is not cheap because the energy needed for cooling is expensive.

Therefore, producers calculate where, until when the vegetables will be sold and keep only the products destined for the catering sector in the freezers until the new harvest. Efforts are being made to complete the sale of products to retail chains before planting begins, i. until April, “said the LDAA director.

According to her, there are relatively few gardeners affected by this problem, perhaps up to a fifth, but production not performed: considerable amounts. This situation has particularly affected farmers gathered in a cooperative, who have come together to mobilize large quantities of beets for export. Significant amounts were to be sold in March and April.

The other part of the victims are small farmers who contract with schools, kindergartens, hospitals and restaurants in their district.

Since everything was closed during the quarantine, small farmers had nowhere to sell their products and generally small farmers’ warehouses are not the best, they will not keep vegetables in them in May and June, ”said Z. Cironkienė.

Stagnant financial flows are worrisome

According to Aušris Macijauskas, president of the Lithuanian Grain Producers Association (LGAA), farmers are concerned about the growing threat of the financial crisis. “The availability of working capital and financing funds is becoming more difficult, both for farmers and for other companies in our sector: processors, grain buyers, exporters.

Financial resources are increasingly difficult to access. This is an important concern for the sector as a whole. We forecast that grain trade may stop in the fall due to this reason, “said A. Macijauskas, head of the country’s grain producers association.

According to the interlocutor, the state should show more initiative in this place.

“For two months, we ask the Government, that is, the Ministry of Agriculture, to develop the instruments as soon as possible. It does not even need to create them, they are time-tested instruments.

We have the Agricultural Loan Guarantee Fund, the Ministry of Agriculture can use EU funds and provide larger-scale state guarantees, and do it in a simplified way, so that (getting a loan) is easy and fast.

These instruments worked in 2009-2010, the Ministry of Agriculture has experience. We are talking, we are talking, we hope that such aid works at least from the end of July ”, hopes A. Macijauskas.

“The processes move when something is already done. As far as we know, it is planned to allocate more than 40 million. euros, but according to our calculations, that is small. The cereal sector alone needs at least € 100 million to prevent trade from affecting farmers. guarantees of the state of the euro “, – stated A. Macijauskas.

Although the situation in the grain market is calm, grain producers in Lithuania may suffer from a lack of financing.

“If you want to sell grain in the fall and get money, you will have to sell it at a much lower price than it will cost on the market at the time, because it will be offered for sale later, in January, February, and payment is postponed to a later date. ” On the other hand, you will have to pay the fertilizer immediately. That is already happening.

Scissors are being formed: money for production is moving more, and payment terms for raw materials are becoming shorter. Here we see the greatest danger. If we are not prepared for this, the losses due to this matter can be enormous, ”predicts the president of the grain producers association.

According to him, the change in grain prices does not allow conclusions to be drawn about the prices of bread or flour in supermarkets. “It is a populist theme, I have been explaining for many years that the price of bread does not depend at all on the price of grain, because grain is only 5% of the cost of bread. These are completely alien things,” smiled A. Macijauskas .

Buyers will not feel the price difference

When countries’ borders were closed during the quarantine and restaurant chains were suspended, poultry farmers had to turn their heads to find out where and how to store unsold products.

“Lithuania was in a good position to export, supplying poultry meat to Western Europe, the Netherlands, the UK, restaurant and cafe chains. After closing the borders, exports stopped, and on the Lithuanian market , public catering establishments closed their doors, consumption decreased, so only poultry meat accumulated, ”explained Vytautas Tėvelis, Director of the Lithuanian Poultry Association.

A similar situation exists in Poland, which is the largest poultry producer in Europe. According to V. Tėvelis, the purchase price in the neighboring country fell by up to 30 percent.

“Unrealized poultry meat has accumulated in warehouses, the quantities of refrigerators are limited, not only is minimal refrigeration needed here, but it needs to be frozen for a long time, which means a temperature of approximately -18 degrees.

Refrigerators were in short supply, forcing further reductions in purchase prices. In Lithuania, poultry meat has become up to 25% cheaper in some periods, ”said V. Tėvelis.

According to him, the poultry sector was not very profitable even before the pandemic, so the fall in prices had a very severe effect on producers.

Although the purchase price has fallen, according to him, this does not mean that it will be possible to buy cheaper poultry in supermarkets in the near future.

“I am talking about wholesale sales. In retail, retail chains have their own policies, they deal with those things in their own way. We are talking about producer prices, “said V. Tvelis.

According to the head of the Poultry Association, the government promised support for the sector, farmers can expect partial compensation for the losses suffered, but the support is delayed.

“We hope that the borders of Western European countries will be opened. Of course, it will be several months before trade relations return to those tracks, contracts and the like will be reviewed,” said V. Tvelis.

In this situation, according to the interlocutor, there is a risk of possible illegal trade. After opening the borders with Poland, part of the population may be tempted to buy cheap chicken meat and then resell it in Lithuania. According to V. Tėvelis, the size of the problematic illegal poultry market is issued for violations registered by the Food and Veterinary Service, in Lithuania its volume can reach around 200 tons.

“If it happened that state support would not go to farms heavily affected by the pandemic, who knows, perhaps some will not resist such losses,” thinks V. Tėvelis.

He chooses to grow, but he does not kill in Lithuania

Vygantas Šližys, President of the Lithuanian Association of Beef Cattle Breeders and Breeders, is not hiding, farmers are fighting: no sales, lack of working capital, a lawn mower on the nose and most buyers of beef cattle, with whom trade relations have ended due to the pandemic.

“The problem with sales, people raise cattle, try not to sell, because our buyers’ prices are really low. Now, maybe a loss compensation program will start to work, of course, it will not compensate everything, but only a small part.

“Prices have fallen, processors are taking advantage of this situation, apparently, and a difficult period for them,” said the association’s president.

According to the interlocutor, the meat of dairy cattle dominates in large retail chains, a situation dictated by our meat consumption habits: we generally choose cheaper but inferior beef instead of beef products that travel abroad from our country .

“About 80 percent. The products of our association’s farmers travel abroad, in the form of weaned calves, which are generally between 7 and 9 months old, weigh around 300 kg and their average price before the pandemic was around 800-900 euros for one of these calves (beef cattle).

Now that the sale through our meat processors was simply not worth it: it raises the cattle for another 10 months to reach the required weight, adds the so-called large bull and gets only 1,100 euros.

Due to the difference of 200 or 250 euros, it is not worth raising another 10 months, there is no system that pays the farmer so much time to feed and fatten the cattle. Such price scissors.

It is no secret that if we look at the average European prices per 100 kilograms of slaughter, in Lithuania it is the lowest, we are the first or the second since the end. Prices differ from the European average by almost 100 euros, “said the interlocutor.

V. Šližys expects that in the second half of the year the situation will change for the better and export routes will be opened. Poland is also comforting in part, where purchase prices are higher than in Lithuania.

According to him, it is likely that the price of quality meat in specialized stores may fall.

“It just caught our eye then. Some sold meat to restaurants because they had not been operating for a long time, demand fell sharply and it was still necessary to sell meat. If you freeze it, you lose 20-30 percent. Values,” said V. Šližys.

Why are farmers paid less?

According to Jonas Sviderskis, head of the Lithuanian Association of Agricultural Enterprises (LŽŪBA), the purchase prices of milk and meat (beef) are determined by two essential factors: domestic sales and exports of these products.

“The prices of these products sold in the domestic market remain stable and guarantee the price level of raw materials in the period prior to the pandemic. And in the store, comparing the first weeks of 2019 and 2020, prices increased, p .2.5 percent fat milk – 5.1 percent, 30 percent. Fat cream – 4.7 percent, 9 percent. Fat curd – 9.6 percent, cheese (enzymatic) – 9.6 percent, beef – 8.9 percent .

So why are farmers paid less? Why have their prices fallen so significantly, by more than 10%? J. Sviderskis asks.

According to him, the prices of raw materials should be fixed, for example, at the prices of March 1, and the processing and marketing companies could review their added value, i. the level of the surcharge and the principles for calculating it.

“Some merchants currently declare 15 percent. Price reductions are not yet reflected in the statistics, but some product price labels are labeled ‘promotion’. So this is just a stock at the expense of farmers. The state could reduce the application of VAT to these products, “said the head of LŽŪBA.

According to him, the impact of the COVID-19 virus on export markets is possible compared to the previous period, although, according to the State Food and Veterinary Service, exports of dairy products to third countries increased by 1,600 tons compared to the same period last year. Therefore, domestic processors must disclose their trade data to public services, such as the Competition Council, the Rural Market and Business Development Agency, which show changes in export prices and volumes compared to the previous period.

“To maintain stability in the dairy and meat production sectors, the resulting negative difference in the value of exports to processing companies must be compensated with EU funds or with the 5 billion allocated by the Government. euro aid package.

This would stabilize the purchase prices of raw materials. We don’t need anything else from the government: only the prices of the period before the pandemic, although they are the lowest in Europe and the balance in the cost limit, and the production resources, fertilizers, food and medicines have become more expensive. For example, feed additives, up to 30 percent.

Then settlements will not be affected and resource providers will not fear farmers’ creditworthiness. J. Sviderskis stated that the losses from the export of imported dairy products for our companies must be compensated by the states (Latvia, Estonia, Poland, etc.) from which the milk or its products were imported for processing.

A representative from LŽŪBA states that farmers do not live in any mood, especially since there were two dry summers and a very rainy autumn before that.

“Disasters unite people, make them more united, closer, more sincere. But all in all? Are there no people who take advantage of the situation and benefit from it? The government must not remain indifferent to this and prevent it from happening. only farmers but also food consumers are held hostage, ”said J. Sviderskis.

“It is an absolutely exceptional situation with painful long-term consequences. As for the economic crises, Lithuanian agriculture resisted them all, suffering a corresponding loss. After them, they stood up and stepped forward. Slowly, patiently , but forward. Without blaming, scorning or naming. It is gratifying that in the face of this disaster, the humiliation of the farmers has decreased, perhaps Sarmatia has become, “added the head of LŽŪBA.