VILNIUS - Russia imposed then lifted a ban on Rokiskio Suris dairy-based imports after its health inspectors found bacteria in one of the company's products.
According to initial reports, Russia's veterinary service slapped the ban on Rokiskio Suris products after discovering a bacterium in a cheese sample. CEO Dalius Trumpa was quoted as saying that the matter would require one to two weeks to clear up.
The ban was supposed to have gone into effect on June 16. However, Russian inspectors lifted it on the day after the announcement 's June 13.
"We did not consider it a big problem. This was not an exceptional case - such things did happen from time to time," Trumpa told the Baltic News Service on June 13.
"We expected the ban to be lifted soon. Moreover, cheese is not a short-lived product, and our partners had sufficient stocks of it," he added.
Rokiskio Suris exports some 25-30 percent of its cheese output to Russia, Trumpa said.
The news came at a challenging time for one of Lithuania's largest dairy companies. The Rokiskio group reported a loss of 9.5 million litas (2.7 million euros) for the first quarter, compared with a net profit of 3.5 million litas in the same period last year.
The company recently stated that it expects to post a consolidated loss of 17 million litas for the first half of this year due to lower prices for export products and a significant increase in the average price for raw milk.
Still, Trumpa said last week that he is seeing the first signs of a recovery in the market.
"Demand for milk products has stabilized and is starting to increase little by little. With demand on the rise, prices for products are likely to start rising again soon," he said in a company publication.
"But this possible rise in prices will not be as steep as it was last year," he added.
All Baltic dairy producers are struggling now that the system of EU subsidies for cheese exports has been abolished. According to the CEO of one Latvian dairy, companies are now forced to raise prices on domestically sold dairy products in order to cover losses on exports.
In Latvia prices for dairy products skyrocketed by over 40 percent last year and have now reached West European levels.
Meanwhile, Prime Minister Gediminas Kirkilas has said that the government would consider a VAT break for domestic milk producers to give them a leg up in the current crisis.
"Such breaks are applied to almost all foodstuffs, except milk. So [milk producers'] demands are substantiated. We will consider this issue," he said in a radio interview June 12.
In the same breath, however, he said that such VAT breaks were harmful to the economy and contributed to the rise in consumer prices.
"We have certain economic problems and we have to assess whether existing breaks contribute to the rise in inflation. Such decisions are not cut-and-dried," Kirkilas said.
Agriculture Minister Kazimira Prunskiene has requested that the 5 percent VAT break should be granted to milk producers.
By contrast, Gitanas Nauseda, an adviser to SEB Bank's president, has said that the government should eliminate VAT breaks so as to slow the growth of consumer prices. He said such breaks were "eating the national fiscal system like cancer."
VAT breaks are currently applied to frozen meat and fish, vegetables and fruit, medicines, organic foodstuffs, some other goods and services.
In Lithuania the VAT rate is 18 percent.
