Банкеръ Weekly

Briefs

ALMOST 300 COMPANIES CLOSED BY NVSC

Manufacturers of foods from animal origin were the first to feel the shocks of the common European market. The authorities of the State Veterinary and Sanitary Control (NVSC) forced 279 firms to stop their production during the week. The extreme measure is in compliance with Bulgaria's commitments with a view to its future accession to the European Union (EU). The country has undertaken to practically bring domestic dairies, slaughterhouses, factories for sausages, fish and honey products, in harmony with European standards and requirements. Unlike the expectations, branch organisations took in the measure as necessary and inevitable, rather than antisocial and restrictive. The acts of the veterinary administration have been acclaimed by the chairmen of the associations of producers of dairy and milk products - Dimiter Zorov and Kiril Vutev - because they affect only those companies which are not able to guarantee the harmlessness of the foods they make. Those firms did nothing to improve their production in order to bring it in compliance with the veterinary and sanitary requirements. Therefore, it's high time for them to be closed down. They are part of the grey economy, they do not pay taxes, and sell their goods at dumping prices, Mr. Vutev pointed out. Drastic sanctions were mentioned half a year ago when the National Veterinary and Medical Service launched large-scale inspections for grading the enterprises, processing animal products. They were divided into four categories according to their ability for structural transformation and readiness to work out business plans for changing their production. The lowest (fourth category) was assigned to those that cannot satisfy the requirements. The firms which were able to extend and improve their operation, but had not made any investments up to that moment, were included in the third category. The NVSC showed tolerance to them. By end-March they will be inspected again to find out if they have worked out business plans for restructuring and if they are ready to implement them. The second grade was assigned to companies with a potential and ensured financing (also under the EU's SAPARD programme), but which for one reason or another had not started to fulfill their investment plans. The grace period for them has been extended till the end of 2005. Companies whose production schemes comply with contemporary requirements and won't be closed down, fall into the first category. The Executive Director of the Association of Meat Processors, Dr. Svetla Chamova, forecasts that about 150-160 firms will drop out of the branch by the year 2006, and some 400-450 enterprises will remain operating: Currently, there are about 600 firms in the sector, 70-80 of which have been included in the fourth category, 220-230 have been assigned first and second grade, and another 300 are in the third category.Experts of the Ministry of Agriculture and Forestry believe that dairy producers are in the most difficult situation, mostly because of the small number of projects for investments in dairy farms under the SAPARD programme. For that reason the NVSC closed down 67 small dairies and another 42 with an industrial capacity but with outdated technological equipment. Therefore, the Agricultural Ministry gladly accepted the proposal of Mr. Zorov, Chairman of the Association of Producers of Dairy Products, that the Agriculture Fund should open in 2004 a credit line of at least BGN30MN for purchase of livestock, and another one of BGN10MN for buying fodder in winter. According to Mr. Zorov, the money is to go directly to the farmers, and the credits should be guaranteed by the users of inputs, i.e. the dairies. Producers of fish products remained almost unaffected by NVSC's measures. Ninety per cent of our output already comes out of restructured enterprises, Valeri Baronov, Chairman of the branch association claims. We underwent that process shockingly back in 1999 when the EU banned imports from Bulgaria. This necessitated a quick replacement of production capacities in the sector in order to regain access on the European market. We made huge investments and hard efforts, which rendered our good competitive. According to our calculations, BGN0.10 per each kilogramme of output now goes for payment of veterinary taxes and maintenance of hygiene in the enterprises, Mr. Baronov explained. However, he pointed out that very soon Bulgarian firms would be ousted from the European market by Chinese and Baltic companies. For processing one container of draught, which weighs about 25,000 kg, they pay a veterinary fee of EUR100. And the fee charged by the Bulgarian veterinary administration is BGN0.03/kg when the fish is imported and the same amount is paid when it is exported, which makes EUR400 per container. How could we then cope with competition, Mr. Baronov asks rhetorically.

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