RIGA - Prices are tumbling in numerous markets this winter as both fuel and food costs have reached a three year low and are set to fall even further.
Oil prices dropped below $50 per barrel on Nov. 22, marking the lowest level in three years. The price per liter for gasoline in Latvia was approximately .59 lat (.83 euro) for 95 octane at "Neste Latvija," "Viada" and "Lukoil" filling stations around the country.
Food prices, most notably the cost of dairy products, have also nosedived and are predicted by industry experts to keep falling.
Inguna Gulbe, director of the Marketing Council Agriculturalist Association, reported that food prices would keep falling provided the domestic economy remained stable. She also said, however, that with the uncertainty of global economics it was difficult to make a firmer forecast.
"At present prices are falling for oil, grain, fodder and the milk purchase price is also lower than last year. All these factors influence food prices," Gulbe told the Baltic News Service.
Not only are food products for human consumption falling, animal feed is also going down, allowing farmers to add to their herds.
"Along with dairy product prices, prices for meat products could also fall significantly due to the decline of feed prices," said the head of the MCAA, an organization that was established to promote domestic and export sales of food products made from local raw materials.
However, despite the falling cost of grain, baked goods are among the food products not expected to decrease in price.
"There will be no price reduction for bakery products, even though grain is cheaper this year," Gulbe said.
Not only are prices falling, the food industry may be looking at an eastern expansion into Russia.
Henriks Danusevics of the Latvian Traders Association said that it is a good time for Latvian food producers to enter the Russian market, as an industrial crisis has begun.
Danusevics said that the Russian market is plagued by unsettled payments between producers and distributors that take more than three times as long to resolve as in Latvia.
"Therefore many producers are no longer able to supply food products to retailers and retail chains face a product deficit," said Danusevics.
Despite a local Latvian view that Russians dislike Latvian goods, Danusevics said that Russians are nostalgic for diverse products.
"There is a nostalgia for Latvian food products in Russia, and the Russians still believe that the Latvian-made products are better and are higher quality than domestic goods," said Danusevics.
After deducting customs duties and transportation costs, Danusevics said exporting Latvian food products to Russia would be profitable. Latvian canned sprats are famous in Russia and are able to turn a strong profit. Danusevics said that Latvian Dzintars cheese would be a prime example of a profitable export.
"If our producers could increase production and work on the Russian market, this is a good time for entering the market and offsetting the losses and market decline on other markets," said Danusevics.