Dairy Director: Concern Is For Local Farmers, Big Lithuanian Processing Plants

Deputy chairman of the Tere milk processing company, Ülo Kivine. (Postimees/Scanpix)
8/8/2014 12:40 PM
Category: Economy

The deputy chairman of the Tere milk processing company, Ülo Kivine, says he is most worried for Estonian dairy farmers after Russia slapped an embargo on Western agricultural products.

Estonian farmers have good trading ties with Lithuanian dairies, which was a feather in the producer lobby's cap, Kivine said, but unfortunately the raw milk that is exported to Lithuania for processing ends up in Russia.

"Good on Estonian farmers, they opened the door to Lithuania," he told ETV. "But they left the key in the Lithuanians' hands. Lithuania is the number-two milk exporter to Russia, number one in cheeses."

Lithuania processes 1,500 tons of raw milk each day, 1,000 tons of which was, before Thursday's embargo, exported to Russia.

Tere processes 400 tons of raw milk a day.

"We currently have over 100 tons of milk, but I would be worrying about the 600 tons that goes directly from farms to Lithuania. The Lithuanian dairy industry must also be wondering what it's doing if it gets 1,000 tons of milk a day, it's piling up in the warehouse."

For Tere, the Russian market has a share of 10-15 percent, and they grossed about 10 million euros a year from export there in recent years.

When the company found itself on a Russian no-import list around Christmas, it had two weeks warning, but this time the sanctions entered into force immediately.

Kivine said that as soon as they heard of the sanctions yesterday, Tere took measures to try to get its trucks to the Russian border faster.

"But it went well with us that we have long-shelf-life products in our stocks and so in that sense we have been 'given' a six months grace period, figuratively speaking," said Kivine.

Kivine said that farm gate prices would fall until an EU intervention price for powder and butter was reached.

"When the price of raw milk falls to 1.7 euros/kg for skimmed powdered milk and 2.2 euros/kg for butter, the EU intervention will kick in and start buying up product for its warehouses. […] That was the case in 2009."

Kivine said it was possible that Europe would need less Russian gas in connection with warm weather and Russia all not need so much foreign agricultural produce, which could lead to changes in the situation.


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