Food exports get help from a middleman

  • 1998-11-19
  • Paul Beckman
VILNIUS – As the Russian financial crisis continues to swirl, Lithuanian food companies that export eastward are getting some help.

The shaky ruble has practically extinguished any hopes that Lithuanian companies might have entertained about going through the usual routines in exporting to Russia. However, the government is ready to help. The Lithuanian Agriculture and Food Product Market Regulatory Agency has stepped in to help food producers get their products sold abroad.

It is not an ideal situation. However, Vidmantas Lape, commercial director of the government agency, indicated it is the most productive solution considering Russia's current circumstances.

"Sometimes private companies that have felt the effects of the Russian crisis like to complain that the government is not supporting them enough," said Lape. "But even compared to last year, we are selling more milk. This shows the government is doing something."

And it does not plan to stop with milk. The Lape's agency is also in the business of buying up a variety of Lithuania's surplus agricultural products. According to Lape, the agency has already bought 450,000 tons of grain to the tune of 160 million litas ($40 million). Thousands of tons of beef, powdered milk, butter, cheese and canned milk are also constantly being snatched up for resale. The quantity and prices of the food products are always under the watchful eye of the Lithuanian Agriculture Ministry.

"This type of system occurs throughout the world, but especially in the European Union," explained Lape. "For example, we buy products at an expensive price and then sell them at market prices. Already we've bought 15 to 20 percent of Lithuania's export products."

Lape said they make contacts with possible buyers by using whatever means they have. Contacts made through fairs, international selling agencies, and even individuals help find buyers for the products. Various weekly tenders are also announced in the state newspaper, Valstybes zinos.

The lingering Russian crisis has led the agency to step up its efforts. According to Lape, they have had some success peddling dairy products in Russia.

"In Russia, which is a traditional trading partner, our products are not faring too badly," said Lape. "Russian customers know our products and sometimes compete with Western ones. It's a worse situation with grains, however. The United States and EU can offer such cheap grain prices that they are practically giving it away like a present. We can't afford to give such a present to Russia."

The agency also has customers in Central Asia and is sending large chunks of butter to Uzbekistan and Kazakhstan. The Uzbekis have already bought 1,300 tons of butter, while Kazakhstan is planning to add 1,650 tons to some amounts they have already bought.

"The Russian crisis will be a long process," Lape admitted. "One purpose of this agency is to maintain a stable export level of agricultural products. Of course the crisis makes everything more difficult. So we are also looking for new partners in Asia and North Africa for example." 

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