Following nationwide protests by Latvian farmers, the government introduced a 70 percent duty on imported pork. The duty went into effect June 1 and is slated to last for 200 days.
Hog breeders warned that without such protective measures, their industry was headed for the slaughterhouse, as local meat processing companies passed up their pork for cheaper imports.
The government's move has had the desired effect; over the past month and a half, pork imports decreased by 55 percent, the State Veterinary Border Inspectorate says. Only 145.6 tons of pork were brought into Latvia in June, compared to 322.6 tons back in January.
The farmers got just what they wanted. But where does it all leave Latvia's meat processors?
Firmly between a rock and a hard place. With fewer imports coming in and only local meat to satisfy Latvians' seemingly insatiable appetite for pork, processors say they cannot keep up.
Even before the government introduced tariffs, the Agriculture Ministry and meat processors warned of the effect it would have on companies that rely on import pork for production. In May, 88 percent of meat used by processing factories was imported; only 12 percent was produced in Latvia.
"Demand for local pork has increased, but there is simply no more pork left," said Maris Kublins, of Rigas Miesnieks, a meat-packing firm. "Processing companies are hunting for pork all over Latvia, but they have no guarantees they will find it to ensure next week's production."
Rigas Miesnieks is one of Latvia's major meat processors, occupying about 10 percent of the market. For the last two years, it bought 80 percent to 90 percent of meat in Estonia because it met quality standards.
Kublins says there is little pork of equal quality in Latvia. He claims local producers overall can satisfy only 40 percent to 50 percent of the market needs. The rest has to come from imports.
"If local producers supplied 80 to 90 percent of the local market needs, then we could speak about market protection," Kublins said. "I think it's illogical to protect the market when local producers can't satisfy the market needs."
Increased demand for local pork caused a jump in wholesale price. Before the 70 percent import duty was introduced, processors bought pork from local hog breeders for 0.60 lats ($1) per kilogram. Nowadays, they have to pay up to 0.95 lats. This will undoubtedly influence the price of the final product.
Farmers, of course, are happy they can sell pork for higher prices, but processors are worried that they might lose their market share to black marketeers who don't have to rise prices on final products.
Kublins claims there are hordes of illegal companies working with contraband meat and producing products that are 20 percent to 30 percent cheaper. Last year, 28,760 tons of pork (43 percent) were brought into the country illegally.
"Meat contraband is the second most profitable kind of contraband after spirits," Kublins said. This is what Latvia should be fighting, he says, not imports.
Latvia's move caused protests from Estonia and Lithuania, both of whom regard higher import duties as a violation of the Baltic Free Trade Agreement.
Estonia's Rakvere Lihakombinaat announced it had suffered 283 million kroons ($18.42 million) in losses after Latvia introduced the 70 percent import duty on pork.
Rakvere is Rigas Miesnieks' major owner and major pork supplier. In the first five months of this year, Rakvere exported 20 million kroons worth of pork to Rigas Miesnieks. Since then, it has been forced to cut its export to Latvia, and is now considering closing its Latvian subsidiary.
"It could be closed but not today," said Andrit Heidov, the assistant to Rakvere Lihakombinaat's general manager. "Today, it's only a forecast, but it may happen if Latvia doesn't revoke the import tariff."
Kublins refused to comment on his parent company's prediction, but estimated that the company would incur a 600,000 lat loss because it will have to buy expensive pork from local suppliers.
"We had definite development tendencies," he admitted, a bit wistfully. "Now they are under question."
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