Baltic poultry businesses may not survive next winter

Photo: Ronald Hissink
Photo: Ronald Hissink

Skyrocketing gas and electricity tariffs promise to hurt Baltic countries this winter and possibly drive some poultry farms to bankruptcy.

Darius Gudaciauskas, director of Lithuanian poultry companies Vilnius Poultry and Kaisiadorių Poultry, said that the increased gas and electricity prices in 2022 have hit his business much harder than the Covid-19 pandemic in the previous 2 years. He added that a sudden jump in energy prices this season has turned into a shock for Lithuanian poultry farmers.

“Imagine, in December 2020, the gas bill for both poultry farms I managed stood at €396,000, while in December of 2022, we expect it to rise to €2.5 million,” Gudaciauskas said, adding that no other agricultural segment was affected by the price hike on the natural gas market to the same extent as poultry producers.

LNG as alternative

In a bid to cut energy costs, both poultry farms embarked on a project of switching heating systems to liquefied natural gas (LNG). Gudaciauskas admitted that this is a risky step, requiring big investments.

Due to increased demand for LNG in Europe or supply disruptions that Gudaciauskas said could no longer be predicted in today’s world, the companies get “a lottery ticket”, and it is unclear how it would eventually play out. “However, common sense dictates that it must be done. Otherwise, we will lose our competitiveness,” he said.

Biopower plants

Another alternative heating solution is associated with building a biopower plant, though the economic feasibility of such a venture looks questionable.

“A few years ago, building such a power plant was not economically beneficial. It paid off better to sell the manure. Of course, with the current level of natural gas prices, that would be very helpful. However, the price of commissioning such facilities also soared. We have previously calculated that constructing a biopower plant near one poultry farm would cost €6 million. Now we are talking about €12 to €15 million,” Gudaciauskas said, adding that one way or another, a biopower plant would not help poultry farmers this winter.

Plea for state aid

Lithuanian poultry farmers hoped that the authorities would come up with a bailout package to bolster their operations and ensure that poultry farms could make it through the cold season.

“Since February, the government has been talking about helping businesses, but so far, we haven’t received any support or attention. We have not got any aid, and we now just hope that we will survive the coming winter,” Gudaciauskas said.

Vorotnikov
Vladislav Vorotnikov Eastern European correspondent
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