“We have recently installed a new production line for the halumi type grill, but we already understand that the level of automation in the company is still insufficient to compensate for the increase in costs. If we want to remain competitive, we will probably have to review our investment plans and increase the amount of investment, ”admits Eģītis.
Namely, the plant must be so efficient that the company can pay the price demanded by the farmers, even if it becomes even higher. Due to global trends, purchase prices are rising throughout Europe, but entrepreneurs are concerned about the fact that growth in Latvia is faster than in those countries with which producers Sērenes piens compete in their target markets.
Thus, the increase in raw milk purchase prices in Latvia over the past year has reached almost 45%. In March, a kilogram of milk cost 0.434 euros, which is one of the highest levels in history. In the Czech Republic, for example, it was 12.3% cheaper and cost 0.339 euros per kilogram, in Hungary it was 23.93% cheaper and cost 0.352 euros, and in Bulgaria it was 14.29% cheaper and cost 0.382 euros.
The chairman of the board of Sērenes piena points out that the fee for raw milk is one of the most important cost items in the production of cheese and other products, therefore the company’s competitiveness in export markets depends on it to the greatest extent. If the market for premium cheeses can still be considered an adequate increase in prices, then competition in the mass market is too fierce and it is virtually impossible to raise sales prices.
“This trend can be clearly seen in our region, where for some time now there has been a stalemate over which of those involved in milk processing – farmers, producers or traders – will” take over “the price increase. Because it is clear to everyone that it will not be possible to pass on the increase in costs to consumers and the prices of final products will not be able to increase indefinitely, ”explains Eģītis.
That is why Sērenes piens is currently exploring a number of possible solutions, including attracting new investors, which would allow the company to become even more efficient, ensure export competitiveness and maintain what has been achieved so far in the Far East. Among other things, in 2022 the company strengthened its position in the United Arab Emirates market, as well as started promoting akavi cheese in the Nordic countries. It is planned to produce products in the amount of at least 2.5 million euros this year.
SIA “Sērenes piens” was founded in 2019 with the aim of restoring the operation of the existing milk processing and cheese factory in Sērene. The company’s paid-up share capital is 300,000 euros. The owner of SIA Sērenes piens is Andris Eģītis.
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