The impact of the Middle East crisis on Latvian agriculture will be significantly more severe next year than it is this year, Guntis Gūtmanis, Chairman of the Board of the Latvian Farmers’ Organizations Cooperation Council (LOSP), told the LETA news agency in an interview.
He explained that most farmers had already purchased fuel, fertilizers, and crop protection products for the current season before the crisis triggered sharp price increases. As a result, many agricultural producers have not yet fully felt the impact of rising costs. However, farms that lacked the financial capacity to build up reserves have already been forced to cope with higher expenses this season.
Gūtmanis stressed that the most serious challenges will emerge this autumn, when farmers begin purchasing fuel, fertilizers, and plant protection products for the next growing season. He noted that current prices are already approximately 30% to 50% higher than they were during the same period last year.
Discussing the broader impact of the Middle East crisis on the global economy, Gūtmanis pointed out that roughly 20% of the world’s fuel and fertilizer resources originate from the region. Supply chain disruptions have created a situation in which demand exceeds supply, driving prices upward. At the same time, higher fuel prices affect not only primary agricultural production but also other sectors of the economy, including logistics and transportation.
Moreover, even if the crisis were to end immediately and the Strait of Hormuz were reopened,
the market would continue to experience significant disruption for at least two years,
he argued. According to Gūtmanis, ports and production facilities have suffered extensive damage and cannot be restored within a short period of time.
The LOSP chairman also acknowledged that rising costs are already forcing some farmers to reconsider their production plans. He estimated that part of the spring crop acreage could remain unsown and that some farms may alter the structure of the crops they cultivate.
As one potential adaptation strategy, Gūtmanis highlighted diversification. He noted that the pea protein processing plant currently under development in Jelgava could stimulate increased pea cultivation in Latvia in the future, while also ensuring local processing and creating greater added value for the national economy.
Commenting on forecasts of possible food price increases during the second half of the year, Gūtmanis said that
prices will depend not only on production costs but also on harvest volumes in Latvia and across Europe.
According to him, even if production costs rise for certain products in Latvia, the resulting price increases could be limited by cheaper imports from countries that achieve better harvests. Therefore, the main trends in the food market will only become clear after the harvest season has been completed across Europe.
As previously reported by LETA, external construction work on the pea protein processing plant being developed by SIA Asns Ingredient in Jelgava is approaching completion. According to the project schedule, construction of the facility will be completed this summer, the buildings will be commissioned by mid-year, and production is expected to begin in early 2027.
An investment of 114 million euros is planned for the construction of the Asns Ingredient facility. In addition to the plant itself, project partners will develop heat and energy supply infrastructure, water treatment systems, and biogas production facilities, which will operate as outsourced services. As a result, total investment in the project is expected to exceed 150 million euros.
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