Банкеръ Weekly

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EU MARKET IS NOT TEMPTATION FOR BULGARIAN G MEAT PRODUCERS

Bulgarian meat producers haven't yet profited by the opportunities they have for duty-free import in countries of the European Union (EU). They have this chance due to the European Association Agreement, signed in 1995. According to analysts, however, their refusal to conquer market positions in Europe is a significant, although neglected, problem which would restrict the investments and growth perspectives of the branch, especially as Bulgaria joins the EU in 2007.One reason for this inertness is the fact that the great part of Bulgarian companies do not have industrial capacity that would meet demand in the big European chains. In the branch, there are mainly small and medium-sized enterprises established to satisfy domestic consumption only. One exception is Bony Oborot AD and its six plants in Lovech, Karlovo, Velingrad, Pravets, Haskovo, and Rousse. It's not an extraordinary fact, says Magdalena Mladenova, expert from the Association of Meat Producers in Bulgaria, since the trade among European countries is dominated by unprocessed meat, whereas sausages and other specific dried products are most often demanded on the regional markets.Bulgaria is no exception from this tendency - its export of sausages is trifling and has not exceeded 200 tons for years. It is mainly directed towards Russia and the Balkan countries (except Greece). Only products of Mekom AD - Silistra, Tandem-B OOD - Sofia, and Nikas AD - Botevgrad were approved for export to EU member states last year. Yet, only the Silistra-based company managed to sell small amounts in Germany and Great Britain.Until last year no Bulgarian slaughterhouse has been allowed by the European Commission to export meat. That impeded the country from fulfilling its cattle meat export quotas of 250 tons. In 2004, the quota will be utilized by four companies - Mecom AD, Rodopa-Shoumen AD, Packing-House - Svishtov AD, and Meat Production AD - Vratsa, as they have already introduced the so called Good Manufacturing Practice (GMP). Besides, they meet all requirements of a 2002 regulation calling for the least possible suffering of animals in the slaughterhouse.Our meat has excellent taste qualities, but unfortunately its consumption in the European countries is banned because of the vaccines used by our veterinary surgeons. In Europe, for example, pigs are not vaccinated against plague because the rich European farmer can afford killing hundreds of infected animals, while the state subsidizes this approach for handling with the disease, the Chairman of the Association of Meat Producers, Kiril Vutev, says.The use of the plague vaccine (until 2005) is the reason why the limit of 3,000 tons of pork and sausages cannot be sold for years on end. According to the branch organisation, only the quotas provided for poultry meat and cans, respectively 6,050 tons and 1,500 tons, have been utilized completely by six companies - the poultry slaughterhouse in Parvomay, Brezovo OOD in the town of Brezovo, Agricol in the village of Okop, Sunny Foods in the village of Tchubra, AVIS in the town of Lovech, and Volets 95 near Plovdiv.It would be nice if we could present ourselves on the European market where prices are much higher, but we cannot surprise the Europeans with less durable sausages, the Executive Director of the Association, Dr. Svetla Tchamova, said. How can we dare step on a market where agricultural products are subsidized? The only Bulgarian export product with established positions is the goose liver. And we could export buffalo meat which is specific and unknown to the European consumer, as well as lamb which is much more delicious than that imported from New Zealand and Australia due to the breeding methods and the geographical position of our country.Europe promises to become a great lamb consumer, so this year the European Commission is abolishing the 7,000 ton limit for import from Bulgaria. Unfortunately, Bulgarian packing-houses cannot profit by this liberal regime since the branch is already suffering from chronic insufficiency of inputs. In order to overcome the deficit, last autumn the Association of Meat Producers proposed that the Ministry of Agriculture and Forestry settle duty-free import of pork, beef, and turkey.However, it was rejected under pressure from the farmers who insisted that this measure did not stimulate domestic production. Members of the association point out that the poor condition of stock-breeding and the lack of farms with large herds impede the introduction of GMP which reflects on the equipment of meat and sausages workshops and makes then incompetitive on the foreign markets. Companies for meat production and processing, particularly since the National Veterinary Service closed some 150 irregular ones, are far away from the requirements for stock-breeding farms due to the huge investments made in the last years. According to the Ministry of Agriculture, since 2001 investments in the branch have reached BGN120MN on 80 projects approved by the SAPARD programme. Not long ago the Agriculture State Fund announced that the financial resources provided by the program are over and the only chance for the branch now is that the European Commission redirects funds planned to support less popular agricultural sectors.It is still to be decided what amounts of meat and meat products the country will be able to produce after it joins the EU. Branch companies worry that the EU quotas may turn out far smaller than the real production. Problems will arise mostly because of the fact that there are no real data about meat production and processing in Bulgaria. The reason is that a big part of the sector works in the grey economy and most of the companies are not registered by value-added tax.

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