Implementation of special support measures and resolving its main problems with effective methods in medium-run may allow to maintain the dairy sector as a significant traditional element of the Latvian economy. It is important to know the gross economic effect of the Latvian dairy sector in order to take informed and rational support decisions. Authors have developed and approbated methods and by applying these have obtained new, unpublished data that characterize economic effect of the sector. The data have been analysed in Latvian and the Baltic States context. It is concluded that the dairy sector is significant to the Latvian economy mainly due to gross value added and especially because of its role in providing work opportunity. Authors call attention to reserves in gross value added growth per full time equivalent unit in the secondary production in all Baltic States. The data of the primary dairy sector level in turn indicate lower potential of growth that is evidenced by even a slight decrease in indicators of the comparatively more effective Estonian producer structure. Therefore, it can be expected that the weight of dairy sector secondary level in the dairy sector gross value added will increase. Authors point out certain possible solutions of the Latvian dairy sector's problems such as promotion of joint ownership structure. Main analysed indicators are gross value added at factor cost, use of labour in full time equivalent units and labour use effectiveness.

Appropriate resources, availability of infrastructure, economic significance and food market forecasts determine the rationale for development of the dairy sector in the Baltic States. The sector is faced by significant economic problems; inter alia, production structure fragmentation, lack of investments and low labour productivity. Several sector's problems can be directly or indirectly solved by integration. Competition legal acts setting strict penalties directly and widely apply to integration processes, imposing a high level of legal risks on integrating parties. Thus, competition legislation forms a central framework limiting and guiding integration. As the subject has not been explored earlier, the author researched the Baltic dairy sector integration options at primary and secondary levels as influenced by the EU and Baltic national competition legislation and its implementation practice. Abstract-logical, monographic and interview methods have been used. The author concludes that law-compliant cross-border integration opportunities for the Baltic dairy sector exist to form larger integrated undertakings with higher market power. Reference to market shares in the competition legislation in countries with lower aggregate crude milk market sales puts the dairy sector participants at a disadvantage in case of integration processes resulting in smaller absolute size of the allowable integrated undertaking. Integration by agreements, decisions and concerted practices is appropriate for national level arrangements but is with limited applicability in the Baltic states cross-border integration at both levels of the dairy sector. In case of concentration, integration may be used to create cross-border integrated structures increasing concentration at every level of the Baltic dairy sector.

The paper deals with the evaluation of resource price preferences and resource utilization efficiency in Latvian dairy sector that shows Latvian relative competitive position both in terms of producing competitive products for the market, as well as ensuring competitive salaries and a general rise in living standard for the employees. The evaluation is carried out through analyzing price levels of the main production resources and the utilization efficiency of these resources, based on the comparison with other EU countries. The efficiency indicators in Latvian primary milk production sector are considerably lower and despite resource price preferences the cost level per production value in Latvia is higher than in other countries. The analyzed resource utilization efficiency is low in Latvia also at the processing industry level, though the current price level of the main production resources helps to ensure competitive positions of Latvian dairy products. But considering large differences in compensation levels for labour force between Latvia and other EU countries, without increase in productivity, the situation is not sustainable in long-term.

The objective of the research paper is to explore the competitiveness of Latvian dairy sector from the aspect of productivity and export indicators, as well as to examine some of the possibilities to improve the sector competitiveness. The authors explore the productivity and export indicators of Latvian dairy sector, and the link between productivity and export (within the EU context), as well as analyse the impact of farm investment support within RDP 2007 – 2013. Value added per labour unit has been chosen as the productivity indicator; suitable qualitative and quantitative research methods have been applied to the studies. Based on the introduced indices of relative position of dairy industry productivity and exports, dairy processing in Latvia has strong inter-branch position in the domestic food industry. However, the inter-country comparison shows that Latvian dairy processing is behind the EU average level, when its productivity and export volume are considered. It has been found that productivity and export of dairy processing are positively related; rather strong positive correlation also exists between productivity in dairy farming and dairy processing. Therefore, the development of Latvian dairy sector, which mainly depends on the development of exports, can be more successfully achieved by the increase in its productivity; and relatively the largest productivity gap to close is in the dairy farming in Latvia. The direct investment support effect on NVA/AWU of dairy farms is found to be significant and positive, indicating that farm modernisation support of RDP 2007 – 2013 has facilitated the improvement of overall dairy farm productivity in Latvia.

Baltic States’ dairy sectors are important to their economies. All Baltic States have had substantial current account deficits that exceeded acceptable thresholds until the year 2009. The States are dairy product exporters. Export capability largely depends on international competitive position of dairy processing companies. Several factors, inter alia, company size determine the position. Largest companies have been formed by horizontal integration. At Baltic scale dairy processing is still fragmented. The aim of this paper is to evaluate economic effect aspects of integration related to exports in the Baltic States’ dairy sector secondary level. As the subject has not been explored earlier at company level, the author researched data of 188 annual reports of 53 Baltic dairy processing companies over the period 2003 to 2009. Descriptive statistics, time series analysis and regression analysis methods were primarily used. The author establishes that among dairy companies which generate significant exports turnover two-thirds are horizontally integrated and include all largest dairy processing firms in the Baltic States. A few smaller firms have succeeded in exporting due to suitable channel management. Among a large group of companies that generate less than 1% turnover from exports, 77% are non-integrated and all are small. Using regression analysis the author estimates that 1% increase in net turnover in the exporting dairy company group is expected to create 0.93 – 0.94% increase in net turnover from exports. Policies promoting mergers of some companies may thus lead to increased dairy exports, higher milk production and fuller realisation of economic potential of the sector.

β-galactosidase (EC 3.2.1.23) is one of the widely used enzymes for lactose-free milk production and whey permeate treatment. Enzymes can be obtained from microorganisms, plants and animals. Nowadays, microorganisms are becoming an important source for production of commercially available enzymes, which are of great interest and offer several advantages such as easy handling and high production yield. The aim of this review was to summarize findings of research articles on the application of commercially available β-galactosidase preparates in dairy industry, to analyse and compare the most suitable β-galactosidase commercial preparates for lactose hydrolysis. The results showed that the main factor to choose an appropriate β-galactosidase for lactose hydrolysis was reaction condition. Enzymes from microorganisms contain a wide range of optimal pH from 4.0 (Penicillium simplicissimum and Aspergillus niger) to 8.5 (Bacillus subtilis). The greatest commercial potential has enzymes obtained from fungi (Aspergillus oryzae and Aspergillus niger) and yeasts (Kluyveromyces lactis and Kluyveromyces fragilis). Fungal origin enzymes are more suitable for the hydrolysis of lactose in acid whey due to its acidic pH but yeasts origin enzymes for milk and sweet whey. In the study, commercial preparates from different suppliers with the purpose to analyse their lactose hydrolysis potential and give more detailed characteristics of each preparate advantages and drawbacks were also summarized.

The aim of this review was to summarize available bibliography on the possible applications of high pressure processing in dairy industry, the effect of this non-thermal treatment on bacterial microflora and milk constituents. Traditional thermal treatments applied to milk processing lower nutritional quality because many nutrients are heat labile. To overcome this problem, several non-thermal processing technologies including high hydrostatic pressure (HHP) processing have been developed. Pressures between 400 and 600 MPa inactivate microorganisms including food-borne pathogens; however, high pressure (HP) injured bacteria in milk during storage can recover. All enzymes are inactivated only at pressures of 800 MPa. During HHP the casein micelle size decreases, whey proteins are denaturated, the level of free fatty acids increases. These characteristics indicate that for better understanding and application of HPP in dairy industry research should be done to offer the numerous practical applications to produce microbially safe, minimally processed dairy products with improved performances, and to develop novel dairy products of high nutritional and sensory quality and increased shelf life.