The only way for the dairy industry to receive adequate pay for milk is cooperation, said Piena loģistika dairy farmers’ cooperative Jānis Ločmelis in an interview to LETA.
He said the cooperative has more than 100 milk farms that produce 330 tonnes of milk every day. This amounts to 13-15% of the total volume of fresh milk in Latvia.
Ločmelis said there are long-term contracts signed for approximately 80% of the volume of milk produced daily. Long-term contracts ensure milk producers are able to work in a predictable and stable manner, as well as dictate prices in accordance with the average price in the EU. “This way we can avoid SPOT markets, where we have to fight for milk prices every three weeks and think where we can sell milk or where to put it. We would rather reduce these risks. This is why we prefer long-term contracts,” said the chairman of the council of Piena loģistika.
He said the cooperative started thinking about long-term contracts in a time when the price of milk was low. “By working with long-term contracts, we can avoid roller coaster risks. Instead we hope the price curve will be equalised. With the roller coaster approach, however, there is an option to earn a lot, but you’re also at risk of losing a lot. In the dairy industry, we are forced to work in the long-term, because the industry is resource-intensive. We reckon that at some point the price will not be as high as it was at its peak, but also will not be the lower,” admits Ločmelis.
According to him, the only way for the dairy sector to receive adequate pay is through cooperation. “Farmers need to unite in cooperatives. It is no less important to express opinions, share ideas, because no one can read the thoughts of every individual farmer. I myself as the head of a cooperative invite farmers to come forth and speak out, because this is how new ideas appear,” said Ločmelis.
Piena loģistika council chairman also said that in the future the cooperative would like to increase the volume of produced milk and the number of its members. At the same time, it is just as important to raise the efficiency of individual farms. “We are working on helping dairy farms become more efficient, automate and modernise production processes. This is why it is not as important to increase the number of members as it is to increase each individual farm’s efficiency. We do have ambitions – while we produce 15% of Latvia’s total fresh milk volume nowadays, we would like to at least double this volume in the future,” said Ločmelis.