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A milk price war has begun between retail chains in Estonia

Estonia 06.12.2023
Source: err.ee
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Under pressure from competitors, the Coop retail chain also reduced the price of drinking milk on Monday, although it considers this unjustified, said Coop CEO Rainer Rohtla. According to a representative of the company E-Piim, which purchases milk from farmers, the game with milk prices creates the impression that other dairy products in Estonia will soon become cheaper.
A milk price war has begun between retail chains in Estonia

According to Rainer Rohtl, Estonian retail chains are experimenting with the price of milk in the hope that this will give them a competitive advantage.

“We are sad to admit that we had to experiment, and Estonian milk can also be bought from us at an unreasonably cheap price, so that buyers do not go to competitors,” said Rainer Rohtla.

“We will cover the difference in price ourselves, but we will not do it silently, but want to draw wider attention to the situation,” said Rainer Rohtla. “A liter of milk in the store costs 20 cents less than the fair price, which means that milk production in "Estonia will end up under pressure, which will put jobs at risk."

From Monday, Coop sells fresh Estonian drinking milk for 59 cents per liter, and 200 ml of coffee cream for 39 cents. Raw milk, before it is processed, transported, stored and sold in the European Union, cost 51.2 cents including sales tax as of October.

However, Estonian milk producers often earn less than the European average.

Margus Leek, chief executive of cheese producer E-Piim, told ERR that the price of milk for farmers is currently low. “For us, milk costs 38 cents plus sales tax. The average price in Europe is higher, but our market situation does not allow us to pay more. If stores reduce the price of milk at their own expense, they cannot be prohibited from doing so,” he said .

Leek said that since E-Piim makes cheese, the company is not directly affected by the price game on drinking milk, but he said because of the price war, consumers expect other dairy products to become cheaper.

"This background is very hostile to our farmers. The state will not interfere or set a price ceiling, but from the farmers' point of view, the price of milk is an ethical question: do people want to support livestock farming in Estonia?" – said Margus Leek.

“In trade, the price of milk is a tool of competitive advantage. This is a topic that comes up every five years when new marketing geniuses come to work in trade. I don’t think this is absolutely correct, trade must use other techniques. If we want agriculture to Estonia has survived, then this kind of action will not lead to the desired result,” said Margus Leek.

“Traders cannot be told how large markups or deductions should be, but playing with the price of milk is unsightly and unethical behavior and disrespects Estonian farmers,” he added.

As Teet Kallakmaa, head of Metstaguse Agro, noted to ERR, the price of milk could reach 45 cents per kilogram. “Then it would be worth producing this milk,” he said. Currently, the Kallakmaa company is paid about 40 cents per kilogram of milk.

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