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Sunday 22.07.2018 | Name days: Marija, Marika, Marina

Why are Estonian products so expensive?

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In spite of relatively low labor costs, producing in Estonia is expensive because of high cost of raw materials, small production volumes and lack of local raw materials, writes Äripäev.

Hallar Maybaum, head of the Estonian Association of Chemical Industries, says that the question why producing in Estonia is more expensive than elsewhere should be asked from our government.

“In the chemical industry, the list includes unsuitable business climate, high labour costs, unstable legislation where regulations are quickly changed, price increase in production inputs such as electricity, raw materials, transport costs, non-existent internal market in Estonia, obstacles encountered in entering other markets, EU’s climate policy, insufficient innovation, low production volumes, inefficient support mechanisms for products. While EU environmental requirements apply on all member states, Estonia is a small country and therefore implementing them here is much more expensive for a similar company in Germany, for instance,” said Maybaum.

Sirje Potisepp, head of the Estonian Food Industry Association, says that one reason why products made in Estonia are often more expensive than imported products is low volumes.

“I can speak for the food industry. No Estonian company is a mass producer as it is globally known. There are food processors that purchase all the raw material from abroad at EU prices and practically cannot influence input prices. The higher the price of raw materials, the more expensive the product in the store.”

Potisepp said that this was creating a problem for the food industry because companies that offer high added value can also pay better wages. “In the food industry, the smaller the production volume the higher the retail price,” she added.

According to Potisepp, one reason why Estonian food and agricultural producers were at disadvantage was that many countries in the world pay high subsidies to their agricultural producers which enables them to keep prices low.

Some businessmen disagree. Kati Kusmin, sales and marketing manager of Baltika, Estonia’s largest clothing maker, disagrees, says that the feeling that most products made in Estonia are more expensive than similar products made elsewhere is purely emotional and is not based on analysis.

“Our sales have been growing and we have been successfully selling our branded products both Estonia and abroad. Baltika sells about 25% of its products in Estonia and 75% goes to exports,” says Kusmin.

Kusmin adds that price is not the only criteria to look at, but only one component of many. “Our objective is not to be the cheapest, but we target our products to a certain target group who demand value for money, convenient purchasing process and good customer service,” she said.

Tiit Niilo, owner of Nopri farmhouse, says that the difference in retail prices is based on actual costs. “Third countries often don’t meet environmental, energy saving, occupational safety and other requirements. Sometimes they also produce manually or use obsolete production equipment. The third reason is that in many old EU member states, producers receive much higher subsidies.”


Leave a reply

  1. Harald says:

    Managers and traders are either incompetent or crooks .Likely both .As for me I no longer purchase Estonian goods high prices for a rather poor quality.

  2. Opaa says:

    propaganda ei call it, what I am reading in here. Compared with other baltic states and russia then Estonian products are with good qualitiy, sadly it makes it more expensive. Estonia workforce is more expensive and developed, that makes it more expensive too.

  3. JPR says:

    just do not buy it

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