This year will be the first year when U.S. giant Smithfield exports from Romania.
At the beginning of the year, Brussels gave the green light to Romanian producers to resume exports. Romania was banned from exporting pigs in 2003 amid fears of swine fever infection.
“It is as yet premature to talk about exact figures, but we can estimate that more than 10% of our production will be directed to intra-community trade,” estimates Bogdan Mihail, CEO of Smithfield Romania.
Smithfield expects to export 85,000 pigs this year from the around 850,000 heads raised in the company’s swine farms every year. Exports could amount to EUR17 million, considering an average price of EUR200/head.
This year the only target for exports are Western European markets, but the US group also plans to export from Romania to China, Russia, and South Korea, once local farmers get the green light to go to these markets.
Mihail does not give exact figures, but says the lifting of the ban on pork exports to EU countries will also help sales on the local market, considering that Romanian cold cuts producers will be able to source the meat from Smithfield’s farms and then export the finished products to Western European markets.
“We will be able to sell pork produced locally to cold cut producers working under contract in Romania (for EU companies i.e.). In this way, we will be able to significantly expand our range of clients,” says Mihail, without providing further details.
Exports are important for Romanian cold cuts producers, considering that domestic consumption has been in freefall for the last three years.
In the first 11 months of last year Romanian processors exported EUR54.6 million worth of cold cuts, up 28% on the similar period of 2010, according to data of the Agriculture Ministry.
Whilst the green light of the European Union on exports will allow the U.S. giant to get its exports running, locally the business continues to be dependent on grain acquisitions from Romanian producers.
Smithfield currently exploits only one third of the 10,000 hectares of farmland that it either owns or has leased in western Romania, according to information in a company report. Production from these plots is used as feed for the 850,000 pigs that the U.S. giant raises in its 46 farms. Aside from its own production, the company also buys grains from local farmers to cover the food needs of the livestock.
“Smithfield has bought over 250,000 tons of grains per year exclusively from local producers, private farmers, associations and agricultural companies,” Mihail also says.
The acquisitions made on the local market by the U.S. group amount to around EUR30-40 million, while the value of plots that the company uses is EUR20 million, according to ZF estimates. The Smithfield official did not specify if the company intended to make other farmland acquisitions on the local market this year.
Smithfield, with sales of $11.2 billion globally, entered the Romanian market eight years ago, when it bought plant Comtim in Timisoara and company Agrotorvis. Since then the company has made a series of acquisitions. One of the company’s business partners was businessman Mounir Halawani, who sold Agroalim Distribution and Frigorifer Tulcea to Smithfield.
(English version by Daniela Stoican)