Latvian poultry market is on the fast track to recovery

01-07-2020 | | |
The whole production of Kekava in Latvia found its way to the market, despite coronavirus' impact on the demand. Photo: Jan Willem Schouten
The whole production of Kekava in Latvia found its way to the market, despite coronavirus' impact on the demand. Photo: Jan Willem Schouten

Demand for poultry meat is already recovering in Latvia. “Forecasts made on the impact of Covid-19 on the Latvian poultry market were worse than the actual numbers now show,” Andrius Pranckevicius, chairman of Latvia’s biggest poultry producer Putnu Fabrika Kekava, said in a statement. “Although the Covid-19 aftermath is likely to be felt for at least 6 more months,” Pranckevicius added.

When the European quarantine to slow down the spread of the novel coronavirus was introduced, Kekava started looking for additional storage space, expecting sales disruptions, Pranckevicius said. That preparation for the worst eventually seemed to be excessive. The company managed to sell all products produced during the 10-week quarantine in Europe, he added.

Consumer behaviour in the spotlight

At the beginning of the retail lockdown, consumers were the main driver of demand as they were seen rushing to supermarkets in order to create food reserves. During the past few weeks, all Baltic countries saw a reverse of this trend – as the demand for chilled poultry is lower than usual because citizens now want to get rid of those reserves, Pranckevicius explained. Kekava is optimistic about the recovery of the HoReCa market. According to Pranckevicius, in this segment, sales have already grown and reached 30% from the pre-crisis level. There are also signals that sales are about to recover beyond the Baltic countries. The country’s biggest neighbour, Germany, is opening cafes and restaurants. The demand from the HoReCa will likely recover with no delays, Pranckevicius said.

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Poultry price wars in Eastern Europe

The oversupply on the poultry market in Eastern Europe is a matter of a big concern for Kekava, Pranckevicius said. Currently, Polish poultry companies have stockpiles of broiler meat and are selling them at a price the market has never seen before, Pranckevicius said. Kekava has a competitive advantage since it sells high-quality antibiotic-free poultry, has a strong meat-processing division and exports large quantities of products so that it can withstand the pressure, Pranckevicius claimed.

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State aid for poultry production on the way

Kekava is now looking forward to state support measures. These were already approved by the Latvian government in late May, with the intention to help poultry companies compete with poultry farms in neighbouring countries, Pranckevicius said, adding that it was not as generous as in some neighbouring countries. As an example Pranckevicius points towards Lithuania. Lithuanian authorities approved a € 174 million bailout package for the country’s agricultural industry in a bid to mitigate the impact of the Covid-19 pandemic. In Latvia, state aid is limited to € 45 million, and only companies, with sales that dropped by at least 20% can apply for support. “In Lithuania, poultry farmers could claim state aid even with a 10% reduction in sales,” Pranckevicius said.

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Vladislav Vorotnikov Eastern European correspondent