Milking the dairy industry

  • 2009-02-25
  • By TBT staff

MILKY EMPIRE: Valmiera Piens, the largest milk company in Latvia, will invest millions in reconstructing its plants.

RIGA - Maxima Latvia, one of the largest grocery chains in the country, has opened negotiations with the Latvian Milk Producers Association to buy products directly from farmers.
Maxima spokesman Ivars Andins said they had been talking to local farmers to be able to offer more selection of products and help bolster a struggling industry.

Previously the fourth largest milk producer in Latvia, with 300 tons of milk per day, Tukums Piens has faced severe market conditions and been forced to optimize. The joint-stock company is one of those in talks with the supermarket chain, and has announced plans to sell Maxima and other dairy retailers 90 tons of milk per day. 

In addition to direct talks with retailers, many dairy companies are seeing increased profit. Latvia's largest dairy company, the joint-stock company Valmieras Piens, reported 32.5 million lats (46.2 million euro) in 2008 sales.

Company CEO Rolands Gulbis said that in 2008 Valmieras Piens spent 1.5 million lats in investment alone.
"The biggest investment we made was in the reconstruction of a plant making whole milk products," Gulbis said. He said investments were also made in the Tetra Top packaging line.
"Regarding the [accuracy of] targets projected for 2009, given the current volatile economic situation it would be too early to make any prognoses, as the main task is to stay in the market," said Gulbis.
The company's main priorities now include broadening its range of products, stepping up exports and developing distribution channels on the domestic market.

"This year, the largest investments are being planned in production development and enhancing energy efficiency. At the same time, regarding our investment policy, we want to raise the issue of the government's inconsiderate system, for instance, the procedure for receiving funding," said Gulbis.
Valmieras Piens is on the forefront of exporting dairy to other EU countries, with dry milk powder and cheese driving exports. Gulbis, however, voiced his displeasure over the current government system for distributing funding.

"Under the existing provisions, we can only receive EU funding after we have finished the project, which is absurd," Gulbis said.
Valmieras Piens ended 2007 with a 32.88 million lat turnover, 1.2 percent higher than in 2006. The company also earned 779,000 lats in profit in contrast to losses in 2006.

Valmieras Piens was founded in 1971 and has operated as a private limited company since 1993. In 2008, the family of Andris Skele, a former Latvian prime minister and the founder of Latvia's People's Party, became indirect owners of Valmieras Piens.