Lithuanian dairy farmers are facing a severe financial crisis as a sharp decline in milk purchase prices has pushed many producers to the brink of collapse. Since last autumn, farm-gate prices have fallen by approximately one-third, leaving many farmers unable to cover their debts to suppliers of animal feed, fertilizer, and fuel.
A Widening Gap Between Cost and Profit
The economic disparity has become unsustainable for many producers. While standard fat milk fetched 40 cents per liter a year ago, current prices have plummeted to between 12 and 30 cents, depending on the quality and quantity of the milk.
Farmers report that the cost of producing a single liter of milk now ranges from 32 to 35 cents. This gap has led to a staggering exodus from the industry; according to the Lithuanian Dairy Farmers Association, about 5,000 farms left the sector last year alone.
Farmers Struggle to Stay Afloat
For many, the struggle is a matter of survival. Arūnas Grubliauskis, head of the Ginkūnai Agrofirm in the Šiauliai district, manages a herd of about 1,000 cattle. His farm receives 29 cents per liter of milk, while production costs have reached 35 cents.
Grubliauskis noted that while his farm is attempting to stay afloat by using income from breeding cattle and agricultural land, not all producers have these alternatives. He has expressed indignation that retail prices in stores remain around 1.50 euros per liter while direct sales prices have collapsed.
Similarly, Svetlana Burbienė, who runs a farm with 44 cows in the Telšai district, reports that her price of 24 cents per liter does not cover costs. Her family has fallen one or two months behind on payments to fuel, feed, and fertilizer suppliers.
Structural Collapse and Cooperative Pressure
Eimantas Bičius, director of the Lithuanian Dairy Farmers Association, describes the situation as remarkably serious. He noted that of the 14,000 farms that kept cows, only about 7,400 currently sell milk, with the remainder either consuming their own production or stopping sales entirely.
The Rešketėnai cooperative, which collects milk from roughly 700 farms in western Lithuania, is too under pressure. Head of the cooperative Algirdas Leščiauskas stated that the current recession, which began last September, is the most severe crisis in about 20 years.
The cooperative is particularly burdened by rising fuel costs, driving more than a million kilometers annually. While they have applied for government compensation for fuel costs, Leščiauskas stated they have not received anything.
Looking Ahead: Potential Outcomes
The future of the sector remains uncertain. Algirdas Leščiauskas estimates that while farms may survive through the summer due to lower costs and increased milk volume, a possible “avalanche” of farm closures could begin in the fall.
Some producers, including Arūnas Grubliauskis, are pinning their hopes on a decrease in market pressure and improving conditions that may occur when the war in Ukraine ends.
For more information, you can read the full article in English here or learn more about how conflict could drive up fertilizer and food prices.
Frequently Asked Questions
Why are Lithuanian dairy farmers facing bankruptcy?
Farmers are struggling as the purchase price of milk has dropped to between 12 and 30 cents per liter, while the cost of production is estimated to be between 32 and 35 cents per liter.
How has the number of commercial dairy farms changed?
According to the Lithuanian Dairy Farmers Association, about 5,000 farms left the sector last year, leaving approximately 7,400 farms currently selling milk.
Why is milk being imported if local farmers cannot afford to produce it?
Eimantas Bičius points to a structural problem where the industry grew so large that local production is insufficient for processors, who must import about 50,000 tons per month from Latvia, Estonia, and Poland to keep factories running.
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