Exports to Russia previously accounted for 77% of the Latvian pig production, with the country exporting a total of 16,300 tonnes (t) of liveweight of pork worth LVL14m (US$28m) in 2011. However, Latvian farmers have been unable to export to Russia since 20 March, when the Russian Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) banned the importation of live cattle, small ruminants and live pigs from the EU over fears about bluetongue and the Schmallenberg virus.
Latvian officials have been outraged by Russia’s subsequent decision to remove restrictions on imports of live pigs from Spain and Denmark and have warned that the Latvian market is facing an over-production crisis.
Head of the Latvian Food and Veterinary Services, Maris Balodis, said: “Latvia has asked the EU about the possibility of bilateral negotiations with Russia, which stated that the restrictions for Denmark and Spain may be removed. Russia continues to put forward a number of claims against most EU countries, including Latvia, in connection with the Schmallenberg virus, despite the fact that Latvia has not had a single case of this disease,” said Maris Balodis, head of the Latvian Food and Veterinary Services.
Johan Matt, an expert at the analytical agency Rīgas Miesnieks, warned that the crisis could lead to a big surplus on the domestic market. “Soon, most Latvian pig farmers, who now have no access to the Russian market, will be forced to slaughter their pigs, and this will lead to large a surplus of meat on the national market,” he said. “This ban could also lead to an increase of meat imports from Latvian neighbours – Germany, Poland, Lithuania and Estonia – where local farmers also face very serious difficulties.”
Impact on profitability
Experts warn that this will have a negative impact on pig prices, affecting the profitability of the sector.
According to Latvia’s Center for Agricultural Market Promotion, prior to the ban, live pigs were selling at LVL1.05 (US$1.97) per kilogram when exported to Russia, but only LVL0.87 (US$1.63) to LVL0.89 (US$1.66) on the local market. Since the ban was introduced, the price of pork on the domestic market has declined to LVL0.85 (US$1.59) per kilogram, which is very close the break-even point. Many farmers are afraid that the second-quarter price will continue to fall.
Inguna Gulbe, head of the Center for Agricultural Market Promotion, said there was no reason to panic. “The overall situation has not changed. In the EU and Latvia, pork prices are stable. The main reason for this is the successful growth of exports of pork from the EU, particularly to China. In addition, it should be noted that the consumption of pork is cyclical and, when the summer picnic season starts, prices will rise.”
However, farmers do not believe China will become a viable alternative destination for trade any time soon. “It is obviously not easy to find replacements to the Russian market, with which we have established long-term trade relations. So if the ban is not lifted soon, then we will have a serious over-production crisis – and all the consequences that come with it,” said a local farmer.