RIGA - Latvia's dairy market urgently needs to undergo consolidation if the Baltic state wants to have its milk and cheeses compete on foreign markets, Andris Skele, former prime minister and chairman of the country's second largest dairy, Valmieras Piens, said.
"The dairy industry in Latvia is too fragmented. It is a problem for competing on foreign markets," Skele told the Dienas Bizness daily in an interview, adding that Preilu Siers is "the only serious exporter."
"The industry is in need of consolidation. I would like to work on this issue," he said.
Skele, who claims to be a rank-and-file member of the People's Party but is widely perceived to be the prime mover in that coalition party, said that the proper strategy in the industry would be for the state to support large farms.
"Such a step is correct 's to support the competitive [farms]. However, for a long time subsidies for the exports of raw materials have been supported by the state. This is a mistake," he said.
He said he wondered why the Competition Council does not launch a probe into unjustified state subsidies in this sphere.
"The government's policy should be aimed at processing raw materials to increase exports of end-products rather than exports of raw materials," he said.
Skele, who used to own a large concern by the name of Ave Lat Grupa, was recently appointed council chairman at Valmieras Piens.
This summer it was announced that his wife, Kristiana Libane-Skele, who is head of the People's Party board, and his daughters, Madara Skele and Anete Skele-Petersone, became indirect owners of Valmieras Piens via a chain of firms ultimately controlled by Sabiedriba Privatiem Ieguldijumiem.
Valmieras Piens, Latvia's second largest dairy, closed the first six months of 2007 with revenues of 15.9 million lats (22.6 million euros). Spokeswoman Zane Pelnika was quoted as saying in July that although turnover did not increase in the first half of the year, the company expected to boost this year's turnover 7.4 percent to 34.9 million lats.
According to a study conducted earlier this year, Latvia's three largest dairies are Rigas Piena Kombinats, Valmieras Piens and Tukuma Piens. Together the three account for 75 percent of Latvia's retail milk sales, with RPK alone boasting nearly 44 percent.
RPK is also the largest ice-cream manufacturer, possessing some 27 percent of Latvia's ice-cream market.