Food and especially meat price surge is expected also in Latvia just like in the rest of the world. However, since global economic processes play a major role in food prices and economists’ concern over yet another wave of the crisis is gradually coming true – quite the opposite process is expected. Prices will drop, Inguna Gulbe, head of the Latvian Agricultural Market Promotion Center reveals in an interview to the news portal BNN.
According to Gulbe, the world is expecting beef price gains. Beef in Latvia is currently twice as cheap as in other European Union countries.
She points out that this can be explained with the fact that locals are not consuming that huge amounts of meat, because it is expensive. Meat consumption has dropped one third in four years time. So, she says, we can conclude that the demand signals for the welfare level and purchasing power in general. If the economic situation improves, people will buy more meat. While if it gets worse, they will simply purchase it less. “We can see the same tendency also in the developed countries whose economies have been expanding. Meat consumption is growing there.”
Gulbe believes that yet another reason for price gains is that Latvia is not producing enough for sufficient meat exports.
“Price gains are currently expected not only for beef, but all types of meat. It does not, however, mean that if chicken gains 20% in the rest of the world, the same will hit also Latvia,” Gulbe says, adding that price gains are expected in 2012 and 2013.
Asked for reasons that push up prices of meat products, she highlights growing consumption in China and India.
“Despite China prefers chicken and duck meat to pork, the economic growth encourages many Chinese travel and take up other eating habits. New foreign companies keep entering also China itself. New restaurants accustom the Chinese to non-traditional products they had never given a try before,” she says.
Gulbe stresses that since economists and financial experts keep pointing at yet another global double dip recession, it is difficult to forecast food price gains. “In case their predictions comes true, prices will drop.”
“According to the current estimates, milk, meat and cereal products will gain. However, the economy that is balancing on the edge of a crisis can introduce some fluctuations as well, because it has a direct impact on these processes,” she says.
It looks like the leading stores in Latvia are not currently expecting meat price gains. Dace Valnere, Rimi public relations specialist, told the news portal BNN that meat suppliers have not indicated any possible price surges.
Also Estonia is concerned over meat price gains in 2012. Its experts expect 20% price increase for pork. Estonian news portal rus.err.ee reports that Olles Horma, Chairman of Estonian meat factory Maag Lihatoostus, says that growing consumption in China boosts global demand for pork.
He also highlights that over a hundred meat production companies operate in Estonia, which means really fierce competition. However, Horma stresses that commodity price gains not always mean price surges also at supermarkets.
Economists point out at possible double dip recession more and more often. Zigurds Vaikulis, head of Citadele Citadele Asset Management Portfolio Management department, told in an interview to BNN that chances of yet another downfall are increasing since economic processes keep deteriorating.
“Another recession will not strike in the third quarter. And not even in the last one. It will be in 2012, which will be a dangerous year. Latvia’s major export markets, also Germany and U.S. will go on showing quite good performance this year. But recession risks will climb significantly next year,” he says.