Latvia’s dairy sector is navigating a complex landscape of record exports alongside domestic challenges, according to recent reports from the Central Dairy Association of Latvia (LPCS). Driven by an eight-year EU-funded market expansion program targeting countries like Canada and South Korea, dairy exports have reached nearly 300 million euros.However, producers are contending with falling fresh milk prices exacerbated by unfavorable weather conditions and rising costs, prompting new cooperative efforts with retailers and government officials.
Latvian dairy product exports have reached nearly 300 million euros, increasing in both volume and value, according to Jānis Šolks, Chairman of the Board of the Central Dairy Association of Latvia (LPCS).
For the eighth consecutive year, the LPCS, along with its members and partners, has been implementing a market promotion program co-financed by the European Union to expand into “third” world markets. Currently, LPCS members are active in Canada, South Korea, and Malaysia. Šolks noted that export volumes of dairy products have hit new records for the third year in a row.
Meanwhile, the domestic market has remained largely unchanged from the perspective of dairy producers through 2025.
This year’s wet and rainy weather significantly impacted milk processing. Milk fat and protein content in fresh milk decreased, and rainfall also disrupted logistics, Šolks explained.
He added that a gradual buildup of product surpluses, coupled with a slow but steady decline in prices for dairy products – particularly industrial varieties – led to a drop in fresh milk prices starting in the second half of 2025, a trend that continues. This situation has negatively impacted both milk producers, who are receiving lower payments for their fresh milk against a backdrop of rising costs, and dairy processors, who are unable to maintain proportionality between the decline in dairy product prices and the purchase price of fresh milk, especially in export markets.
Despite these challenges, fresh milk production increased by 1% in 2025 compared to 2024. The average annual price of fresh milk also rose by nearly 20% in the first ten months of 2025 compared to the same period in 2024. This translates to an approximate 60 million euro increase in revenue for fresh milk producers, a relatively small but still significant contribution to offsetting previous losses, Šolks clarified.
The LPCS signed a cooperation memorandum this year with Latvian food retailers, their representative organizations, and the Ministries of Agriculture and Economy.
The LPCS also monitored retail prices for dairy products to the extent possible and found that at least 12 dairy product categories experienced price reductions ranging from 0.5% to 4.5%. Only cottage cheese, yogurt, and sour cream saw slight price increases, between 0.6% and 1.2%. These changes were influenced by both market shifts in the global dairy sector and the implementation of agreements outlined in the memorandum.
Latvian food producers have also welcomed the decision to reduce the value-added tax (VAT) rate on certain food products starting July 1, 2026. Latvian food producers view this as a first step toward real state support for strengthening the competitiveness of food producers, while also increasing the affordability of food products for consumers. The LPCS expressed confidence that this small beginning will lead to a logical and proven approach to the food product market in the future, potentially reaching a 5% VAT rate for food overall.
The Central Dairy Association of Latvia was registered in 1994, with its primary goal being the protection of the interests of dairy processing companies. Information on the cooperative’s website indicates that it currently has 17 industry companies as members.
Latvia’s dairy industry is experiencing a period of mixed results, with strong export growth offset by challenges in the domestic market and weather-related production issues. The country’s dairy exports have surged, reaching nearly 300 million euros in value, but producers are grappling with falling fresh milk prices and logistical hurdles.
According to Jānis Šolks, Chairman of the Board of the Central Dairy Association of Latvia (LPCS), the organization has been actively working to expand into international markets for the past eight years through an EU-funded program. Current efforts are focused on Canada, South Korea, and Malaysia, and have resulted in record export volumes for the third consecutive year.
Despite the success abroad, the Latvian dairy market domestically has remained relatively stable through 2025. However, the industry faced setbacks this year due to unusually wet weather, which reduced the fat and protein content of fresh milk and complicated transportation.
Šolks explained that a combination of increasing product surpluses and declining prices for dairy products led to a decrease in fresh milk prices beginning in the latter half of 2025. This price drop is squeezing both dairy farmers, who are receiving less for their milk amid rising operational costs, and processors, who are struggling to adjust retail prices to reflect the lower cost of raw materials.
Despite these difficulties, fresh milk production actually increased by 1% in 2025 compared to the previous year. The average price of fresh milk also rose by almost 20% during the first ten months of the year, resulting in an estimated 60 million euro increase in revenue for producers. While this increase offers some relief, Šolks noted it is a relatively small offset to previous losses.
Looking ahead, the LPCS has forged new partnerships with Latvian food retailers, industry organizations, and government ministries through a recently signed cooperation memorandum. The association has also been monitoring retail prices and found that most dairy product categories have seen price reductions, with only a few experiencing slight increases.
The industry is also anticipating a positive impact from a planned reduction in the VAT rate on certain food products, set to take effect on July 1, 2026. The LPCS views this as a crucial step towards supporting the competitiveness of Latvian food producers and making food more affordable for consumers. The association hopes this will pave the way for a broader reduction in the VAT rate for all food products to 5% in the future.
Founded in 1994, the Central Dairy Association of Latvia represents 17 companies in the dairy processing sector and advocates for their interests.
