How did the pandemic affect the dairy sector?: TOP10 dairy sector’s events in Latvia

The coronavirus this year affected every area of business, including the dairy sector and Latvia’s leading dairy and ice-cream producer “Food Union”. Irena Holodnaja, “Food Union” head in Latvia, shared the five most important dairy sector events and five events in “Food Union” in 2020.

5 MOST IMPORTANT EVENTS IN THE DAIRY SECTOR

The Saeima did not support the initiative to reduce VAT rate on dairy products to 5%
The Saeima (the parliament of the Republic of Latvia) this fall two times rejected the initiative to reduce the value added tax (VAT) rate on dairy products, as well as bread, meat, fish and eggs to 5%, thus, the opinion of the dairy sector remains unheard. These changes would have provided a significant support to Latvian families, especially people with lower income, promoted availability of whole meals, consumption of fresh and healthier food products, and would have positively affected inequality of income in Latvia. Also, it would have improved competitiveness of Latvian farmers and local producers in the store shelves.

Despite the crisis, milk prices are stable
Even though in March, a significant impact of the pandemic on fresh milk prices had been predicted, it did not come true. In spring, prices dropped just by 10-15%, in summer they stabilized, but since August, they started to climb again and currently are at -5% against the previous year. Respectively, consumers this year enjoyed unchanged dairy product prices as during the pandemic, producers “froze” the price hikes.

State rushes to assist dairy sector
In order to stabilize the situation in the dairy sector, the state came up with several support measures. The Rural Support Service (Lauku atbalsta dienests – LAD) supported farmers and food manufacturers with a number of support mechanisms with a goal to stabilize income of businesses during these challenging times.

Dairy companies support less protected social groups
When the pandemic started, dairy companies were among the first ones to provide support and donate to less protected social groups. Thus, 16,000 children from poor and large families with many children across Latvia received “Food Union’s” “Rasēns” milk worth EUR 100,000. Medics, under the program “Galds savējiem”, coordinated by “Hospiss LV”, received “Kārums” curds snacks and “Tukuma piens” yoghurts, as well as products made by other food producers.

Long-term agreements on cooperation with farmers provide the necessary stability
The Covid-19 situation proved the role of a long-term cooperation model between dairy producers and dairy processing companies. It makes both parties confident about availability of resources in the visible future. Farmers know that their milk will have a stable buyer and they will have guaranteed and timely payments. Meanwhile, for the dairy processing companies, a long-term cooperation with farmers means that every day the necessary volumes and quality of milk will be delivered to the plant.

5 MOST IMPORTANT EVENTS IN “FOOD UNION”

Development of the Centre of Excellence for Fresh Dairy Products of “Food Union” completed
At the end of 2020, one of the most significant Latvian food sector investment projects will be concluded – development of “Food Union’s” Centre of Excellence for Fresh Dairy Products. More than EUR 11.1 million have been invested in the project in the past two years, and as a result a new production unit has been built, new production equipment (for yoghurt, curds snacks, ice-cream and other products) has been purchased, and all production has been focused in Riga, the territory of AS “Rīgas piena kombināts”.

“Food Union” offers dairy and other products on online store pienaveikals.lv
Reacting to the growing demand of consumers for food products without having to visit stores, “Food Union” in April opened online store www.pienaveikals.lv with home product deliveries. The online store offers fresh and most popular dairy products and ice-cream, as well as other popular meat, egg, bread and other products directly from producers.

“Kārums” has a new home, new packaging and new products
This autumn, “Kārums” brand, loved by many people since their childhood, has seen the biggest makeover in its history, with “Food Union” investing EUR 5.5 million in it. The new curds snack plant has been built and has been put into full operation. Alongside, “Kārums” brand has been modernized – the visual identity has been renewed and packaging designs have been changed, with the long-loved symbol of a crow symbol. Also, eight new “Kārums” products have been created – 3 innovative yoghurt bars, 1 classical curds snack, 1 desserts and 3 cream yoghurts.

Novelties of “Pols” ice-cream – the most popular in the country
“Food Union” created 10 new ice-creams for Latvia’s market in the 2020 season and 100 novelties for other European countries. Many of them immediately gained popularity. Thus, “Pols” new products won the TOP3 in the Latvian market. Candy-cotton ice-cream in the large waffle cone was the season’s most popular new “Pols” product. The second and third positions were won by both geometric-shape “Pols” ice-creams (square and round ice-cream sandwiched between cookies) – they are being made on the new ice-cream bar production line that has been bought with the co-funding from the EU.

Export of ice-cream and other products to Eastern Asia developing
Despite the uncertainty caused by the pandemic, this summer “Food Union” launched export of the well-known and popular brands in Latvia and Estonia, “Ekselence”, “Pols” and “Lakto”, to three Eastern Asian countries. As a result, demand for Baltic-made ice-cream and Latvian curds snacks has increased considerably in Hong-Kong, Singapore and Taiwan. It is planned that by the end of 2020, export to these exotic countries could reach EUR 2 million, but in 2021 it could grow by 50%. At the same time, the company continues exports also to other countries of the world.