Inside Milk
Professionalization in Romanian dairy sector
Dairy farming in Romania has made a professionalization effort between 2018 and 2019. This is shown by research by Coface Romania. The production of drinking milk has increased by 8% and more than half of the companies show an increase in the net result. It should be noted that the debts on these companies are high.
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Coface Romania's research shows that income on dairy farms in Romania increased by 2019% in 5 compared to the previous year. Profitability has also increased slightly: from 4,3% to 5,4%. As a result, more than half (61%) of the more than 500 companies analyzed showed an increase in the net result. In contrast, 34% of Romanian dairies recorded a decline in turnover. For 10% of those companies, this involves a loss of more than 20% compared to the previous year.
Professionalization process
Our own production of drinking milk increased by 2020% in the period from January 2020 to August 8. The largest amount of milk was produced in June 2020, namely 108.979 tons. In this way, the sector is professionalizing step by step. Dutch dairy cooperatives, such as FrieslandCampina, are also committed to the country, including by supporting this professionalization drive. For example, Romanian dairy farmers can be part of the Dairy Development Program of the Frisian cooperative.
But, there is a challenge. "The dairy industry and the cheese processing sector remain highly polarized, with a high degree of player concentration. The upper segment is dominated by multinational companies, with experience of the entire production chain: from raw materials and processing to distribution," the researchers report. In Romania, the 10% largest companies have a market share of 66%.
Import as a threat
Although the entire dairy sector in Romania benefits from the professionalization and the increasing demand for dairy products from consumers, there are also a number of threats. This is what the Coface Romania study states. For example, almost half of dairy farms (47%) have a debt burden of more than 80%.
The import of dairy products also puts high pressure on indigenous companies, especially in the context of 'food labelling'. The amount of imported raw milk increased by 2020 tons (or 24.160%) between January and October 28,2 compared to the same period in 2019. Butter imports increased by 10,8%, drinking milk imports increased by 9,1% and the import of cheese by 1,6%.