Milk price situation continues to confound state, farmers

The Lithuanian government on April 11 repealed the resolution on minimum milk purchase prices and differentiation of direct payments in terms of the number of cows, while disgruntled farmers struck back by demanding more direct compensation and threatened to picket in front of Parliament.

Explaining the government's decision, Agricultural Minister Jeronimas Kraujelis said, "Instead of these resolutions, we have decided to submit a resolution on stabilization of milk-purchase prices in April - September of this year."

According to the minister, dairy processors agree to pay a minimum of 0.3 litas (0.09 euros) per kilogram of the highest-grade milk to cow breeders who have between one and four cows.

In Kraujelis' words, the country's five biggest dairy processors, including Rokiskio Suris and Pieno Zvaigzdes groups, have agreed to pay no less than 0.3 litas per kilogram of milk to small dairy companies, while the government has decided to partly compensate for the storage costs of exported dairy products.

The earlier resolution had been passed on March 24 in response to farmers' demands. It introduced a minimum milk purchase price of 0.35 litas per kilogram and was supposed to pay uniform direct payments for cows to all farmers.

However, dairy producers said a uniform milk purchase price would lead to the bankruptcy of larger producers, who used to sell milk to processors for a higher price on the basis of separate agreements.

For their part, farmers pointed to a 25 percent drop in milk purchase prices last year and inadequate budget funding for agriculture this year, and on April 14 they demanded that the government take regulatory measures and earmark an additional 100 million to 120 million litas to cope with agricultural issues.

Jonas Ramonas, chairman of the Lithuanian Chamber of Agriculture, said about 5,000 to 10,000 farmers dissatisfied with the government's agricultural policies intended to picket the parliament building.

"This year farmers' incomes may be the lowest since the country regained independence," Ramonas said in a news conference on April 14, adding that lawmakers have approved only 228.5 million litas in allocations for the agricultural sector in the 2003 budget, compared with 450 million litas requested by farmers.

Algirdas Razauskas, president of the Association of Agricultural Companies in Lithuania, said incomes from milk production declined by around 60 million litas in 2002 and warned that they may fall by another 130 million litas in 2003 unless radical measures are taken.

Razauskas said that under the current conditions the Lithuanian milk industry may collapse before the country joins the European Union.