Forecast of the milk production demand and supply in Latvia

Abstract

The purpose of this investigation is to analyze the milk production supply amounts relation to its price and milk products consumer prices index in 2002-2015 time periods in Latvia. Latvia farmers have seasonal milk production with peak every summer and through every winter, to produce milk at as low a cost as possible. Between 2002 and 2015 milk production supply is increased twice or from 384871.4 to 807572.1 ton. In 2002 the average milk production supply price in Latvia was 135.7 EUR per ton and between 2002 and 2008 milk price was increased till 338.9 EUR per ton. Milk prices in 2015 were, on average, around 25-29% lower than in 2014 and was in average 135.7 EUR per ton. Therefore, after the abolition of milk quotas in the European Union, the cow milk production in Latvia has increased continuously and increased by 3176 tonnes (0.4%) in 2015 compared to 2014. According to the analysis of covariance milk supply amount is influenced by milk products consumer price index (CPI) and year, and milk products CPI depends on milk production supply price and year. There is significant interaction effect between factors; the effect of milk products CPI on milk supply and production supply price on milk products CPI is different for different years.

Keywords: milk suplly and demand; milk products consumer price index; time series models