Cattle farmers have repeatedly accused processors of putting pressure on the milk price and acting in concert on the market, and the Competition Council launched a probe into this in 2013. Major retailers sell milk for about 4 to 5 lei (about EUR1) per liter while small traditional retailers may sell it for as much as RON7 per liter.
“A solution to get a fair farm gate milk price is to have farmers form collective farms and associations,” said Nicusor Serban, owner of Agroserv Mariuta in Ialomita County (SE Romania). His 802-cow farm was the fifth largest in Romania in 2013.
Serban says he sells the milk to processors for RON1.75 lei per liter (excluding VAT) via Romlacta, an industry association of 12 producers, according to the latest data available. The farmer says that as far as his business is concerned, the RON1.75 price is ‘a fair price’ that allows him to cover costs and make profit. The level, however, depends on producer, he added.
The same goes for Liviu Balanici, owner of Panifcom Iasi (NE Romania), who has 640 cows and feels that if farmers want to be able to raise the milk price, they should stand united. “Processors in Romania want us to quote them winter and summer prices, but there’s is no such thing. We cannot take the cows out to graze as they do in other countries. Cows in Romania can only do that for one month, one and a half months at best,” Balanici said.
Whereas farmer Nicusor Serban says he sells milk for RON1.75 per liter, the data provided by brokerage and advisory firm CLAL, which operates in the agrifood sector show the average milk sale price stood at RON1.24/liter in the first two months of the year.
Romanian farm gate milk price is the lowest in the European Union. The lack of competitiveness is also due to 40% of the country’s dairy cows being raised in rural households instead of industrial farms, and most of their milk does not reach processors or go straight to the market.
Agrozootehnica Comisani, a medium farm with 310-head of cattle paid EUR78,000 for a number of Jersey cows, known for their fat milk and low maintenance costs. The idea was that a higher fat and protein content would drive the farm gate milk price up.
“I bought 47 Jersey cows from Denmark and paid EUR1,670 for each of them. The increase in fat and protein content of the milk will lead to a higher price thereof,” said Mihai Caceamac, head of department with Agrozootehnica Comisani and until recently its manager.
The milk price depends on a number of factors, including quality and quantity and there is a base price from which it is recalculated. Caceamac estimates the farm gate price currently stands at RON1.45 to RON1.85 per liter and reaches RON1.6 to RON2 after recalculation.
“The milk price will be on the rise this year because production will be lower, according to EU regulations,” he said.
Agrozootehnica Comisani has exclusive milk sale agreements with Danone, which pays RON1.45 per liter, a price that may go up to RON1.5 to RON1.6 after recalculation. It sold 1,210 tons of milk to the French company.
Costel Caras, owner of the farm by the same name in Ilfov County, southern Romania, says the farm gate milk price starts from RON0.9 per liter and may go to RON1.5 to RON1.6. A fair price would be RON1.8 so as to cover costs and make profit.
Some farmers expect fodder price to go up this year if the heavy rainfall continues over the next few weeks and corn and alfalfa crops will be compromised.
“Corn is almost compromised due to the rain because it’s spoilt,” says Vasile Musceleanu, owner of a cattle micro-farm. He estimates farm gate milk price will go up from RON1.4 per liter to RON2 per liter this year.
Alfalfa is not doing any better, either, because the bad weather prevents people from harvesting it.
“Fodder will be a disaster. Alfalfa harvesting should have started by now but could not due to the rain. Alfalfa needs about ten days to dry,” Mihai Caceamac said.
Some producers believe the deregulation of the milk market next year will hurt the small farmers.
“After the liberalization of the milk market, it will be a cutthroat competition in terms of prices out there but quality will come first. In a few years, the small farmers will disappear,” Caceamac says.
The deregulation of the market will also entail an increase in milk imports into Romania, since countries like Poland and Denmark can produce higher amounts at better prices. This is why government subsidies will not be the same for cow milk as for meat.
“Payment per each cow is RON453, but milk producers may get RON730 to RON1,000. It’s an aid meant to boost production,” said Agriculture Minister Daniel Constantin.
Milk importers ordered EUR24.5 million worth of milk from Poland alone last year, and exports to this market were 50 times lower. Overall, the milk trade deficit stood at EUR100 million, with exports amounting to EUR40 million and imports to EUR142 million in 2013.
(English version by Loredana Fratila-Cristescu)