Riga, March 6 (LETA) - It is difficult for small food producers in Latvia to compete with imported products, the association Farmers' Parliament told LETA.

The organization pointed out that the lowest direct payments in Europe to farmers, high electricity and labor costs, as well as geographical location are the main reasons why Latvian farmers find it difficult to withstand price competition with imported food products in retail networks.

Farmers' Parliament also noted that amendments to the Unfair Trade Practices Prohibition Act include a cap on the mark-up of food products, as well as new and higher penalty rates for retailers.

Maira Dzelzkaleja-Burmistre, the organization's deputy chairperson, said that before imposing food mark-up restrictions on retail chains through regulation, it is necessary to understand the main reasons why local farmers and small producers cannot compete with imported products from large agrarian countries where farmers have received large subsidies for decades and are therefore able to offer prices many times lower.

She pointed out that Latvian farmers still receive the lowest direct payments among European Union (EU) countries. So, for example, a farmer in Poland who receives more support from the EU is able to compete more successfully on the European market.

Secondly, according to Dzelzkaleja-Burmistre, Latvia has high electricity costs, which significantly increase the cost of fruit and vegetables, and businesses are still faced with insufficient labor availability and a high tax burden.

Latvia's geographical location also affects the situation - it is virtually impossible for Latvian farmers to compete in terms of output with the large agrarian countries on the southern side of Europe. Latvia has a shorter growing season and therefore lower yields. At the same time, the financial investment is higher.

Although the amendments to the Unfair Trade Practices Prohibition Act aim to promote fair trade practices and ensure equal competition by limiting the mark-up of food products and imposing new and higher penalty rates on retailers, Dzelzkaleja-Burmistre is concerned that the seemingly good idea of defending local farmers will have the opposite effect.

"The relationship between retailers and local producers will become even more tense, and of course this applies more to small producers and suppliers. It is they who will suffer the most. The only winners will be the large wholesalers and producers," said Dzelzkaleja-Burmistre.