Latvian milk producers expect higher purchase prices due to Agrone deal
Latvian milk producers hope that Agrone’s application to acquire dairy processing companies in Riga and Valmiera could increase demand for raw materials and raise purchase prices. The deal still requires approval from competition authorities in Estonia and Latvia, ERR News reports.
Plant capacity
If the deal is concluded, Agrone could become the largest milk producer in the Baltic states. The combined processing capacity of the two Latvian plants is about 1,000 tonnes of milk per day, comparable to the new production complex in Paide. Part of the capacity of the Latvian enterprises is currently unused.
The complex in Paide plans to produce large volumes of mass-market products, while the Latvian companies focus on fresh dairy products. Their well-known brands include Kārums, under which curd snack bars coated with a thin layer of chocolate are produced.
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Farmers’ expectations
Arturs Čirjevskis, chairman of the board of the Riga Dairy Plant, said that the company specializes in high-value-added products and is active in export markets. According to him, annual sales growth amounts to 2%, and its products are available in 30 countries.
Agrone owner and CEO Raul Jeets noted that the prospects of companies in the sector depend on investment, which requires reliable supplies of raw materials. He added that for more than ten years, the company had been seeking an opportunity to process its milk within the framework of long-term cooperation.
Valters Zelčs, an expert at the Latvian producers’ association Zemnieku saeima, said that if the Riga Dairy Plant operates at full capacity, processing volumes and demand for raw milk could increase. In his view, higher demand and competition could provide producers with a better purchase price. The Baltic milk market is a common one: raw materials are sold where it is more profitable, and products from neighboring countries are available in stores across the region.
