Agriculture, Analytics, Baltic, Baltic Export, Banks, Foodstuff, Lithuania

In Lithuania almost as much raw milk is produced a year as in the two other countries taken together and that country accounts for 60% of the total amount of dairy products produced in the three countries.

"Increased demand for raw milk and an increase in the local and export markets for dairy products have increased optimism in the dairy sector, which is getting over the impact of the years of downturn. Therefore many milk producers and milk processors have started to invest again," Ainar Leppanen, head of retail banking at the SEB operation in Estonia, said.

"Just like in many other fields of agriculture, we can see a gradual increase in the share of organic production also in the dairy sector," Leppanen added.

The annual raw milk output of the three countries has been in the region of three million tons in recent years, of which Lithuania accounts for almost half. The output volumes for Estonia and Latvia are approximately 0.7-0.8 mln tons, and about 1.4 mln tons for Lithuania. Where Estonia's annual output has been growing, the output of Latvia rather has been on a downtrend. 

The output of dairy products produced in the three countries has been stable at slightly over 2.8 mln tons, a little under 1.7 mln tons of which is the output of Lithuania. The amounts produced in Latvia and Estonia are approximately 0.6 mln tons each, and just like in raw milk production growth has been registered in Estonia and a decline in Latvia of late.

The gap between the amount of milk produced and the amount of dairy products produced is widest in Lithuania. As a result, the export of raw milk from Latvia to Lithuania increased 12% in 2018. Export of raw milk from Estonia to Lithuania meanwhile dropped 3% year on year after a hefty rise in previous years. 

SEB observed that the main global milk producers have registered growth in recent years which is sufficient for meeting global demand. Dairy product prices in the EU have fluctuated little since 2015. 

SEB compiled the report based on data from Eurostat and national statistical offices.