Initially, the price drop could be observed on the shelves with milk pricing alone, but it has spread to other dairy products too. The price of drinking milk has fallen year on year by an average of 7 percent, cheese by 20 percent, and butter by 25 percent.

Prisma's head of procurement and product selection, Kaimo Niitaru, said this was not a one-off either. "We are instead seeing that regular prices have come down over the past few months," Niitaru told "Aktuaalne kaamera."

At the same time, around two-thirds of dairy products are sold at promotional prices in any case; for producers, the price decline had already begun some time earlier, with a lag seen before this reached the shelves.

Maido Solovjov, CEO of the Estonian subsidiary of Finnish dairy producer Valio, said: "The last price increases from our side were sent out a year ago, but, unfortunately for us, prices have only gone downward since then. At the same time, we do not monitor all products on store shelves, but speaking more broadly for the dairy industry, I can say that there have definitely been no price increases for a year."

Ants-Hannes Viira, head of agricultural policy at the Chamber of Agriculture and Commerce (Eesti Põllumajandus-kaubanduskoda), sees the main factor here as European wholesale market prices and oversupply, adding that the market will recalibrate in due course.

"In the previous couple of years, milk and dairy product prices were particularly high. This represented a highly favorable period for dairy producers, and they expanded production and increased output. Now we are in a situation where consumption has not kept pace with production, leading to overproduction and falling prices. As prices fall, production will decrease after some time. The market will regain balance and prices will return to a normal level," Viira said.

Estonian dairy prices alone were already affected last year by the E-Piim saga. E-Piim, a major producer which bought dairy output from Estonian farmers but exported most of its products, has now filed for bankruptcy.

Even last year, E-Piim cheese was sold at highly discounted prices of just over €6 per kilogram, half the price of most of its competitors. This, in turn, set off a price war.

"This also forced other domestic dairy producers to lower their cheese prices. In that sense, what has been happening around E-Piim has influenced the local dairy market for quite some time. The hope is that the situation will normalize in the second half of the year. The hope is that despite the bankruptcy process, E-Piim's plant will continue operating, which is very important. If the plant were not operating today, we would see significantly lower milk purchase prices, and many producers would likely have to shut down production," Viira explained.

Of signs of change, wholesale prices in Europe are already gradually on the up again.

"If we look at butter and skimmed milk powder prices on the German market, for example, the bottom of the price decline was in December–January. In February and March, we have already seen prices increase. It is true that cheese prices have not yet started to rise, but we can assume that the bottom has passed and prices will gradually begin to grow," Viira went on.

This rise in dairy product prices will likely reach Estonia by summer, or autumn at the latest, meaning consumers have a few more months to enjoy the relatively low prices for dairy products.

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