EU – Baltic States, Foodstuff, Latvia, Markets and Companies

She said that there are segments in the Latvian food industry where most employees work for the minimum wage. Since the minimum wage is going to rise next year and the excise tax on fuel and gas is growing as well, there are no reasons for food prices to drop in 2018 as production costs are not expected to decrease.

In Gulbe’s words, Latvian milk purchase prices are still relatively low in comparison with other EU member states. At the same time, the dairy industry is seeing improvement as companies are finding new sales markets amid political developments. For instance, Mexico, which used to import a lot of dairy products from the U.S., has stopped buying these products from the U.S. because of the political situation. Some dairy companies have seized this opportunity and started shipping their products to Mexico.

The head of the institute said that dairy product prices rose in retail trade this year, especially for products with higher fat content, but there are no reasons to expect this trend to continue.

In the meat segment, prices have also been quite stable. Although the pork price climbed in the summer, the period of high meat prices was short and the price has dropped again. Unless African swine fever, which has been plaguing the Latvian pig farming industry for several years already, causes some major problems, everything should be alright, Gulbe said.

Grain prices have been stable as well. If the grain prices remain low, the prices of eggs, meat and flour products should be stable as well, Gulbe said. Latvian farmers’ failure to harvest all the crop this year does not mean that bread will become more expensive next year, as grain only makes up 10 percent of the prime cost of bread. Latvia’s grain exports are strong and in that respect Latvia is competitive in the world’s markets.