We will hold on until the last, in the sense that we will definitely not reduce the purchase prices for raw milk from partner farms, and we will not raise the prices for dairy products in the next few weeks,” the head of one of the largest dairy companies in Moldova shared with Logos Press correspondent the plans for the near future. – Although there are plenty of reasons to revise the prices”.
“Fuel is expensive to buy, plastic is hard to get”
Without getting distracted by personalities (it is not so important, because the heads of all dairy enterprises in Moldova are currently experiencing similar problems and, apparently, will solve them in similar ways), I will give the main “theses of observations” of producers of dairy products.
Dairy products will not rise in price. At least some of them, and at least for another two weeks. And maybe – and until the end of April. The main argument in favor of this assumption is the activation of sales (butter, cottage cheese, cottage cheese pastes, etc.) on the eve of Easter. After all, the tradition of baking – both industrial and homemade – festive kulichi, cottage cheese, etc. is still alive in Moldova. After Lent, there is a tangible improvement in the situation with “cache-flow”, the daily receipts of dairy factories. Apparently, this stimulates them to fight for the market and push back the “D-day” of the risky operation of raising prices for final products.
In this regard, it is worth recalling that last fall, the largest operator of the Moldovan dairy products market, followed by some (but not all) other factories, raised prices for their products. On average, by 5-7%. A repeated, in just six months, and significant price increase for the same goods of frequent (for some – daily) consumption is a great risk of social and official discontent.
Therefore, domestic producers of dairy products will probably be able to take such a step only all at once. So that they would not be so afraid of imported competitors and authorities.
By the way, the head of the Ministry of Agriculture and Food Industry (MAIA) Ludmila Katlabuga has already “issued an indulgence” – she announced the possibility of a 10% increase in food prices due to rising fuel prices. She noted, incidentally, that the responsible institutions had been informed about the need to monitor the formation of prices on the shelves and to prevent unjustified increases.
At least the operators of the agri-food sector now have an idea of the maximum limit of permissible.
Transportation costs have increased significantly. By tens of percent per kilogram of finished products. Dairy producers have no idea how to offset at least partially the increase in this cost item.
Here it is important to note that the production of dairy products (as well as many other livestock products) especially needs to strictly maintain the integrity of the “cold chain”. And industrial refrigeration means significant expenditures on energy resources in general.
Costs for packaging materials and other “consumables” have also gone up. Maybe not as much as diesel fuel and gasoline, but they have also increased significantly. For example, cardboard has already risen in price by 8-10% for two weeks.
The price of plastic – polyethylene packaging, personal hygiene products (gloves, bathrobes, etc.) has risen even more significantly. Worse, in the context of the global “plastic inflation” due to the blockage of oil traffic in the Middle East, it is not easy to buy these goods even at the increased price. All food producers have rushed to buy packaging materials in case of a protracted conflict that turns into a systemic crisis and severe shortages.
Obviously, in such a situation, large transnational players of the global food market will have great chances to form buffer stocks of production materials. Moldovan dairy farmers are not among them.
Expenses for dairy raw materials will not decrease. Two years ago, the Moldovan dairy raw material market moved away from the traditional practice of fluctuations in purchase prices – during the transition from “low” to “high” season, from warm season to cold season. That is, once milk processors kept the prices for raw materials at a high winter level, i.e. – did not reduce the purchase prices in spring-summer. Apparently, this will not happen this year either.
Dairy factory managers realize that farmers are already under severe pressure due to the unprecedented rise in the price of diesel fuel during the hot period of spring field work. Dairy producers also realize that against the backdrop of tougher competition with imports, the reduction of the domestic raw material base will be a “double blow” for them.
Nevertheless, external observers who are well acquainted with the state of affairs in the industry have no doubt that “dairy producers will still have to tighten their ‘pessimistic planning’ scenarios in the near future, i.e. raise prices for final products”.
