Rising food prices expected

RIGA - A significant increase in food prices is expected in Latvia in the coming months, according to information from the Agricultural Market Promotion Center, reports Nozare.lv. “Regardless of warm and sunny weather in Latvia, there have been various natural disasters elsewhere in the world. Prices for key food commodities have increased on global markets. Latvia will be no exception, and prices for food products will increase in the coming months,” said the Agricultural Market Promotion Center’s chief, Inguna Gulbe.

The Center says that the prices will increase by about 10-30 percent.
On Aug. 20, Gulbe said that, taking into account the current developments on global markets, it is very likely that the prices of food products in Latvia will not decrease, though she was then unable to estimate how much the prices could increase.
“Prices for bread and meat will definitely increase, dairy products will also become more expensive,” said Gulbe, adding though that the price increase will be partly offset by the sharp competition among producers in the region as well as the low purchasing capacity among consumers.

Gulbe also said that Latvian producers and retailers would not be able to raise the prices as much as they want. If they do, Lithuanians, Estonians or Germans would immediately use the opportunity to sell their less expensive products here. As for bread and meat prices, which Gulbe said would certainly increase, this will happen because of the higher price of electricity, fuel and increasing labor costs, she explained.

Latvia’s farmers are taking advantage of higher world commodity prices. In the first six months of this year, compared to the first half of 2009, exports of Latvian agricultural and food products increased from 279.1 million lats (398.7 million euros) to 321 million lats, reports the Latvian Agricultural Market Promotion Center.
Exports to Russia increased 26 million lats as exports of liquor increased significantly, while live hog exports to Russia grew nearly threefold. Exports of Latvian alcoholic and non-alcoholic beverages increased 27.6 million lats, whereas imports of tobacco products fell 8.3 million lats.

“These results, which are of much importance to the national economy, were achieved as a result of well and strategically thought-out operations of Latvian companies over the past several years,” said Gulbe. The situation on global markets has created a supply-demand environment where prices have been growing strongly for dairy products and grain, she added.