VILNIUS - Russia has decided to raise duties on imports of Lithuanian dairy products beginning in September, a protectionist move that appears to be motivated by the fact that many Lithuanian dairies' exports are subsidized by the European Union. Starting in late September, duties imposed on imported cheeses from Lithuania will rise by 12 's 13.5 rubles (0.31 's 0.35 euro) per kilo, according to reports.
Rokiskio Suris will be hit the hardest, though the total cost of new duties to Lithuanian dairies is projected to amount to 1.5 million litas (400,000 euros) annually.
Lithuanian milk processing companies have obtained 17.6 million litas in EU subsidies for the exports of dairy products to non-member countries in the first half of 2006.
Dairies were slated to receive a total of 14.5 million euros in subsidies for the export of dairy products outside the EU in 2005. The money includes both export subsidies and assistance for development such as creating storage for mature cheeses, the usage of butter and cream for the production of ice cream and production of casein from skimmed milk.
Dairies were naturally disappointed with the news, though their opinions diverged as to the ultimate effect of the duties.
Gintaras Bertasius, CEO of Vilkyskiu Pienine, the country's largest cheese maker, said, "The rise in duties should not result in any major changes in the company's exports to Russia. It will definitely have its effects on trade, however, it is not yet clear when these will show up."
Antanas Trumpa, CEO of Rokiskio Suris, Lithuania's largest dairy, said the hike in duties might prompt the company to cut exports to Russia, which would affect the performance figures of the company.
"We have not discussed this matter with our Russian distributors yet. We will decide whether we should boost the prices or cut the supply leaving the prices unchanged in a couple of weeks," Trumpa said.
Julius Kvaraciejus, chairman of Pieno Zvaigzdes, noted that the new duties would affect both milk producers and processors. "We will not be able to raise the prices for our cheese because of the tight competition. The hike in duties will have almost no effect on this years performance figures," he said. "We will not reduce the price of raw milk since the duties will be raised in late September. However, next year our position will be worse than this year."