Soaring costs of butter continue, as asserted by Latvian dairy manufacturers

In the bustling city of Riga, the cost of dairy products, including butter, has seen a significant increase in recent years. This trend, evident in shops and markets across the city, has been influenced by various factors.

According to data from 2022, a kilogram of butter was priced at 14 euros. This price hike can be attributed to the growing demand for butter, not just for direct consumption, but also for use in other food products such as pastries, bread, and creams.

The increased demand has led to a situation where butter imports in 2024 exceeded local production, with around 4,000 tonnes imported from countries including Lithuania, Estonia, Germany, and Poland. Despite this, approximately 2,000 tonnes of the total butter production were consumed domestically in 2024.

The current average price of butter stands at 15.1 euros per kilogram. This price corresponds to the actual production costs, as mentioned by Jānis Šolks, the head of the Latvian Dairy Committee (LPCS).

The rise in the price of milk, which started at the end of 2023 and continued through 2024, has also contributed to the increase in the price of butter. This is another point emphasised by Jānis Šolks, the chairman of the board of the LPCS.

Riga's largest butter producers include Rīgas piena kombināts, Tukuma piens, and Preiļu siers. Despite butter being a smaller component in terms of volume in the overall dairy sector, its demand is on the rise.

However, not all Riga residents have been able to keep up with these price increases. Some have had to reduce their butter purchases due to a lack of growth in purchasing power.

The foreign trade balance for butter is currently negative, with imports exceeding production. However, there has been a 3% growth in exports to countries like Estonia, Germany, and Lithuania.

Despite the current situation, Jānis Šolks, the LPCS head, has not promised a fall in butter prices. He cited no indications that the purchase price of milk in Latvia or worldwide will fall, which could potentially lead to a decrease in the cost of butter.

In conclusion, the rising prices of butter in Riga's shops and markets can be attributed to a combination of factors, including increased demand, higher production costs, and the impact of global market trends. While the price of butter may continue to rise in the short term, it remains to be seen how these factors will evolve in the future.