Food prices, especially for fruits and vegetables, could rise soon due to labor shortages and the restrictions place around season workers during the coronavirus (COVID-19) crisis, the Chamber of Agriculture and Commerce said. Meat prices are not expected to change and the price of milk has fallen.
Ülo Kivine, Member of the Management Board of Tere and Farmi dairy industry, said it is too early to predict price changes in the dairy sector. "As the inertia of raw material and finished product prices in dairy is very high, it is too early today to say what the new reality will be, it must be shown in the coming months," he said.
Almost half of the milk produced in Estonia is exported, but in an emergency situation the export market has slowed and the purchase price of raw milk has fallen below the cost price of milk production.
Roomet Sõrmus, head of the Chamber of Agriculture and Commerce, said so far the biggest changes have been seen in consumption habits. For example, people have stopped buying more expensive products and there has been an increase in cheaper products such as minced meat. This, in turn, affects the turnover of meat producers.
Labor shortages are currently a problem in both the livestock and fruit and vegetable sectors. "Some European Union member states have been looking for solutions on how to ensure the entry of foreign labor into their countries, but it will certainly not be possible to guarantee full-scale seasonal workers this season," Sõrmus said.
Labor shortages will lead to higher fruit and vegetable prices. "Estonia imports a significant amount of fruit and vegetables, which is why problems in sourcing seasonal foreign labor can reach Estonian consumers as well. Due to labor shortages, some fruit and vegetables in Europe will go unharvested, which has a direct impact on consumers," he said.
There is currently no solution in site for the Estonian agricultural sector in terms of seasonal labor, which is why the prices of domestic strawberries and other products will probably rise this year.
Sõrmus said the market may also be affected in the future because countries such as Russia, Ukraine, Belarus, Armenia and Kazakhstan have banned the export of several types of cereals, onions and garlic until the middle of summer, and many countries require additional certificates. At the same time, the transport service itself has slowed, become more expensive and there are difficulties with the availability of containers and packaging.
No increase in meat prices is expected
Olle Horm, chairman of the management board of Atria Estonia, said the prices of meat products are significantly more affected by the spread of African swine fever than the COVID-19 crisis. "Pork prices in Europe are still very high and meat prices have risen since the beginning of the year," he said.
The emergency situation does not create major obstacles for the meat industry. Horm said the situation with the labor force is stable, in an emergency situation it may be more difficult than usual to find people to work on farms, but this does not affect the work of factories. There are also no barriers to importing and exporting goods, although longer-than-usual delivery times must be taken into account when ordering spare parts for equipment.
Horm also said people are buying cheaper meat and demand for minced meat is high. He added this has also been observed during previous crises. "Since all restaurants are closed, no one eats more expensive meat anymore," he added.
According to the meat industry, the rise in the prices of meat products has stopped by now. "The prices of meat products have risen a little earlier this year and they should not rise any more," Horm noted.
Editor: Helen Wright