According to LRT English, the sharp fall in milk purchase prices has left Lithuanian dairy farms in a critical situation.

Since last autumn, the purchase price of milk has fallen by about a third, meaning that many farms can no longer cover the costs of fuel, fertiliser and feed. Some farmers are already selling off their livestock, whilst others are trying to hold out at least until the new harvest.

Whereas a year ago a litre of standard-fat milk cost over 40 euro cents, farmers now receive only 12–30 cents, depending on quality and volume. At the same time, producers estimate that the production cost is 32–35 cents per litre.

The crisis has already led to a massive contraction of the sector. According to the Lithuanian Dairy Farmers’ Association, around 5,000 farms have ceased dairy production in the last year alone. Currently, fewer than 7,400 farms sell milk commercially.

Despite this, Lithuanian processors are forced to import around 50,000 tonnes of milk every month from Latvia, Estonia and Poland in order to keep their plants running.

Retail prices remain unchanged

In the Šiauliai district, the Ginkūnai Agrofirm company keeps around 1,000 head of cattle, half of which are dairy cows. The farm produces 10–15 tonnes of milk per day.

Farm manager Arūnas Grubliauskis says the situation is critical.

“It is no secret – things are bad. We are receiving 29 cents per litre, and our production cost is 32 to 35 cents,” he said.

Just a year ago, the farm was planning to expand, but it is now forced to offset losses from dairy production with income from arable farming and the sale of breeding stock.

Farmers are particularly outraged by the fact that retail prices have remained virtually unchanged. In Lithuanian supermarkets, a litre of milk still costs around €1.50.

“The way the profits are divided is not fair. We can see perfectly well that we receive cents whilst the shelf price is €1.50. Fuel prices at petrol stations always respond to changes in the crude oil price. Milk prices do not seem to work the same way,” said Grubliauskis.

The farmer adds that he is hopeful the situation will improve once the war in Ukraine has ended and the market has stabilised.

Paying bills months late

In the village of Buožėnai, in the Telšiai district, farmer Svetlana Burbienė and her family keep 44 dairy cows. The farm produces around 500 litres of milk every day.

At 24 cents a litre, the family can no longer pay their bills on time.

“We are a month or two late paying for fuel, fertiliser and feed supplements. Fortunately, our suppliers are understanding and will wait,” she said.

According to the farmer, the farm was operating steadily just a year ago, but now the prospect of closing it down is becoming increasingly likely.

She also draws attention to the problem of concentration in production.

“In Lithuania, it seems only the very largest will survive. But large farms are not immune to disease. Just imagine what would happen if a herd of a thousand animals had to be destroyed. Where would the milk come from then?” says Burbienė.

‘We have already tightened our belts as far as they will go’

Cooperatives are also under considerable pressure. The ‘Rešketėnai’ cooperative, which collects milk from around 700 farms in the Samogitia region, supplies approximately 75 tonnes of milk daily to processors in Lithuania, Latvia and Poland.

Algirdas Lesčiauskas, the chairman of the cooperative, notes that the current crisis is the most serious in the last two decades.

Smaller farmers who supply unchilled milk receive just 15 pence per litre. Larger suppliers receive up to 30 pence, although the cooperative itself sells the milk to processors for an average of 27 pence.

“We have stopped calculating production costs, because we can no longer do anything about them. We have already tightened our belts as far as they will go. The rise in fuel costs has hit us particularly hard – we cover more than a million kilometres a year. We are now considering whether it would be cheaper to buy fuel in Latvia,” Leščiauskas said.

He predicts that many farms may close as early as this autumn, once the summer grazing season has ended.

Processors are purchased from abroad

Eimantas Bičius, director of the Lithuanian Dairy Farmers’ Association, describes the situation as a systemic crisis.

According to him, Lithuania’s processing industry has expanded to such an extent that domestic production is no longer sufficient to supply factories with raw materials.

“I would describe the situation as very serious, because there is no light at the end of the tunnel. There is talk that demand will grow in a year or two, but the question is how many farms will still exist by then. A farmer needs to put fuel in the tank today, not in 2027 or 2028,” Bičius said.

He also drew attention to the recent farmers’ protest in Vilnius, during which producers handed out free milk to passers-by in an attempt to highlight the significant gap between purchase and retail prices.

“For some reason, prices in the shops are not falling,” he concluded.

Source: LRT English