TALLINN - The Estonian dairy industry has been brought to the verge of collapse as the world economic crisis takes its toll and milk prices continue to plummet.
According to Statistics Estonia, the purchase price of milk in February fell 31.8 percent year on year to 3,585 kroons (229 euros) per ton.
The purchase price of milk was down by nearly 6 percent against January.
The amount of milk bought from farmers declined by 3 percent to 46,300 tons. Month on month the amount of milk purchased decreased by 8 percent, the statistics agency found.
The worsening situation has forced the country's agriculture ministry to turn to the European Commission for additional aid. The ministry said that it is expecting additional measures to support the dairy sector along with a number of other European states.
The ministry said that in the deteriorating economic situation that sphere had been hit the worst.
The EU agriculture and fishery ministers' meeting on March 23 in Brussels mainly focused on the situation in the dairy sector.
Agriculture Minister Helir-Valdor Seeder said the Commission had already taken certain measures to support dairy economy.
"Somewhat more urgent action is expected from the Commission and where necessary, the taking of additional market organizational measures," Seeder said.
"It is to be expected that the Commission may come out with certain additional measures in the next few months, but today we do not know yet what they could be," he said.
The purchase prices of raw milk have fallen rapidly throughout Europe causing widespread problems for the industry. The ministry said the problems stem from a collapsing market and drastically reduced demand.
Dairies produced about 7,000 tons of drinking milk, 2,700 tons of sour milk, 1,800 tons of cream, 1,700 tons of cheese and 1,100 tons of curds during February.
As the market continues to deteriorate, Argo Piim, one of the largest milk producers and farming subsidy recipients in Estonia, has passed into the hands of Tallinna Aripank (Tallinn Business Bank) co-owner Andrei Zhukov, the business daily Aripaev reported.
According to the paper, it became known on March 23 that the shares of Agro Piim moved from the account of the Russian-equity Nutritec to that of Zhukov's company, Leonarda Invest.
Ulo Kivine, the manager of Tere, another large dairy company, said that Zhukov had acquired a well developed business that still held great potential. Kivine said the sale shows that the dairy industry could begin to turn around in the near future.
"Agro Piim is a well-known and large player on the Estonian agricultural map. It has very strong farms into which robust investments have been made. Such a major change of ownership is a sign that the agricultural and dairy sector has been to the bottom and entrepreneurs again dare to invest in that sector," Kivine said.
On March 20, Argo Piim manager Michel Rannala still did not have any information about the possible sale or the new owner.
"All I know is that negotiations have been held with buyers," he told the Aripaev.