Raw material crisis leads to a doubling of imported milk

“We do not have the quantity of milk and are lowering the price for quality. Milk imports will double this year compared to last year, also due to price hikes announced by the producers of raw materials,” according to a declaration for Business Standard by Ioan Balan, Vice President of the Milk Industry Employers Association and General Manager of the Covalact dairy company. Romania imported 89,690 tons of milk and dairy products in the first 10 months of 2007, worth €15.8 million, reports data by the Ministry of Agriculture.

Balan added that threats by cattle breeders to raise the price of the raw material, milk, is somewhat justified, because costs for insuring fodder and food for animals have risen sharply due to last year’s drought. On the other hand, the representative of Covalact believes that the price of domestic milk is similar to that in the European Union (EU). “We at Covalact buy milk domestically at some €0.34 per liter, while the European average is €0.38-0.42. However, we cannot compare the quality of Romanian milk with that in the EU,” said Balan. According to the Agrostar Employer Union, the sales price demanded by farmers is €0.42 per liter of milk meeting EU standards, and €0.28 per liter for milk not meeting these standards.

Covalact’s General Manager said that the company will increase the amount of imported dairy products and raw material this year. “Why produce butter when it costs us RON 15.5 to produce a kilogram of butter, and we can import this for RON 10-11 per kg? I will do the same with powdered milk, which we will prefer to import,” he asked. Balan indicated that Covalact will not raise its prices in anticipation, as Friesland and Danone have done, but rather drop prices on some products, including sour cream, due to a lowering of fat from 15 to 12 percent, thereby aligning its prices with those of international producers.