ZSA management comment on the situation in the dairy industry

One of the most pressing issues in agriculture in recent days is the fall in the purchase price of milk. It is difficult to predict whether another milk crisis is just around the corner. The current situation in dairy farming is commented on by Juris Cīrulis, deputy chairman of the board of the association “Zemnieku saeima” and owner of SIA “Mežacīruļi”, Jelgava region.

After the last crisis, the average milk purchase price grew rapidly, reaching a relatively high level. 2017 was a time when dairy farmers had to pay off their debts and start building savings. Currently, the milk purchase price has decreased by approximately 2-7 cents. We did not expect such rapid negative price fluctuations. Can this be called a crisis? It is too early to judge and time will tell, but the signs are worrying. However, in order to strengthen the industry, we must already start working on the next level of cooperation by merging milk cooperatives. In order for farmers to more successfully defend their interests, they must become a significant and strong player in the industry. This would allow for more successful negotiations with milk buyers. We believe that the option proposed at the meeting – to publish the milk purchase prices of specific companies every month at the national level – is acceptable, as it would make the sector more “transparent” and allow for a better understanding of what is happening in the industry. We would also like to see everyone in the chain, including processing companies and supermarkets, more “transparent”! As an example, we have recently been receiving calls from members in our organization with complaints about a specific dairy processing company that has been failing to pay farmers for the milk it has delivered for a long time. The milk buyer is not paying the farmers a single cent, as a result of which the farms have not received tens of thousands of euros.

Should the issue of reduced VAT on milk and dairy products be prioritized at this time? We believe that it is not, because the reduced VAT has only been applied to fruits and vegetables for 2 weeks and we do not yet have any conclusions on how it will affect the vegetable growing industry. In order to decide on its application to milk, a deeper assessment and broader discussion are needed.