Milk War Ready To Burst

Romanian milk producers are ready to stage unprecedented protests as they claim that some 200 million EUR worth of subsidies is overdue since 2008. They are also concerned that the State subsidy for milk quality is not going to be disbursed on time - after January - because the State budget has not been drafted and the subsidy is part of the budget.

Dorel Secara, President of the Federation of Cattle Farmers in Romania (FCBR), believes that the estimated 230 million EUR in subsidy for this year only covers 70-80% of the real need. Because of disbursement delays and the general lending slowdown, Romanian milk producers are complaining that they can no longer compete with counterparts from other EU countries, where the subsidies are higher.

Romania imports some 400 tons of raw milk per day from Hungary, Poland and other nearby countries, according to Romanian milk producers. Secara pointed out that the volume of milk currently imported from Hungary, Poland and the Czech Republic was normally shipped to Spain and Italy in wintertime. However, the decline in the number of tourists and the number of jobs in industrial and construction enterprises in these countries has caused changes in the trade routes, so the cheap milk has been redirected to Romania and Bulgaria.

In order to cope with the massive imports of cheaper milk, Romanian producers first picketed the border with Hungary and, in the absence of any results, made the painful decision to lower the price of milk in wintertime. Normally, sales and margin are very good in wintertime, as small farmers are busy coping with the high cost of fodder for the cows.

This winter, however, the situation was entirely the opposite: "The price of raw milk paid by dairy companies to farmers dropped 15-20% last month," said Costel Caras, the President of the Romanian Cattle Farmers Union (SCTR). Small farmers have also been hit hard by the economic crisis, as dairy factories are delaying payments for the raw milk they buy.

Consequently, the price of raw milk decreased from 1.2 RON/litre to 1 RON/litre and, sometimes even from 0.8 RON/litre to 0.6 RON/litre. "This is primarily caused by milk imports from Hungary and Poland. Normally, the price of dairy products should have decreased. The dairy producers and retailers are responsible for the unwarranted price increase," said Caras.

Moreover, most of the foodstuff sold in Romania is imported, so the devaluation of the RON will soon boost the retail price of dairy products. After the major dairy companies and retailers announced price increases because of the higher price of raw milk, Caras stressed that "these prices are exclusively set by dairy companies and retailers, without considering the opinion of the farmers or the price paid for raw milk." Or the best practices...

All these issues will be discussed today by Agriculture Minister Ilie Sarbu and the associated cattle farmers. The latter have already announced street protests, unless a compromise is reached. "If the Romanian State cannot help and protect milk and beef production in Romania and prefers to encourage foreign farmers, they should say so loud and clear and we will protect ourselves," Caras said.