Банкеръ Weekly

Briefs

EUROPEAN FOOD QUALITY WILL BE QUITE STIFF

Food products made in Bulgaria will begin to grow expensive in 2004 and that tendency will continue until 2007, European experts comment. By the time Bulgaria joins the European Union (ЕU), food in Bulgaria will remain only 15-20% cheaper than it is in the rest of Europe. The statement refers to products that are of traditional value for Bulgaria people - milk and meat, bread, drinks, pastry. There are lots of reasons for that, but the most important of them is the introduction of the European manufacturing standards which are to replace the domestic ones by 2007. As a result, Bulgarian consumers will enjoy better quality of the food, although at a higher cost.Most of the small food producers - dairies, butcher's shops, bakeries, will be closed as they will not be able to meet the new requirements. If they want to continue operating, they will need considerable investments in the equipment and reconstruction of their production units. The owners will have to substitute even the faience in their units. However, most producers do not have resources and bank credits are not always accessible because of the lack of collaterals. According to unofficial information, at least 250 companies operating in the Bulgarian food sector will be closed. Only 82 enterprises have met the EU standards by the end of 2003, whereas about 700 have done nothing in this aspect.Four hundred big producers and 20 smaller ones may be closed by the end of 2005, should they fail to meet the requirements. Only large and economically sound companies will survive on the market, but in order to return the investments made they will be forced to raise their prices. On the other hand, the elimination of small and economically weak producers threatens to make certain companies monopolists on different sectors of the market. Then, only import could keep prices lower, but in order for this to be made domestic and international product prices should be close or equal.The first signs that new prices are coming can be seen already, experts claim. They were first noticed in the milk products sector - soon after inspections started of the condition of the branch, a few companies were closed and prices went up. Yellow cheese, for example, is already being sold at an average retail price of BGN8 per kilogram. Some dairies are preparing further raise of the prices which will become valid in mid-February, distributors said. The average price of the yellow cheese will remain high - its supply went down as it is already produced by approved dairies only. For the present, cheese remains at low prices, although its retail price goes beyond BGN3.50/kg, compared to BGN2.90/kg in the same period of last year. Even milk prices went up and already exceed BGN1.10/litre.Prices on the meat market will go up, too. Inspections of meat processing companies will begin a little later - probably in the summer. It is already known, however, that at least 30% of the currently operating slaughterhouses and meat processing enterprises will have to either renovate their technological equipment or close down. That move will reduce the amount of meat which is of low quality or has expired, but will raise the meat prices by 25% by year-end. Besides, owners of small slaughterhouses are already unable to keep their production also because of the fewer animals and the increased import of meat particularly preferred by the sausages makers. Countries from the EU overproduce this product, so their price competes with the Bulgarian one, importers explain. Moreover, European companies offer packaged meat which is suitable for direct production of sausages, has a certificate, and a proven origin. That's why many Bulgarian slaughterhouses are faced by bankruptcy as very few of them have capacity to package meat according to the EU requirements. This makes sausages producers buy products that they do not need in fact.The market of drinks, especially wine, will go through the process of equalizing its prices with the European ones, too. Quality Bulgarian wines cost between BGN5 and BGN15 per bottle, as much as wines produced in Chile, Australia, and South Africa do. That's why imported wines are already more demanded on the market, as soon as they offer unknown taste at the price of the Bulgarian products. Even France, Spain, and Portugal, some of the largest and most famours producers, are stepping on the top-quality wine market. At present, local producers only control the lower-quality wine sector as well as the market of strong drinks.Bread price is the only one that may remain relatively stable in 2004. As bread is a product of extreme importance to Bulgarian people, transition to the European prices will be delayed as much as possible. At present, a kilogram of white bread costs BGN1.20 on the average here, while it is sold for more than EUR2 in the EU member countries. Pastry is still much cheaper than those imported mainly from Greece. However, imported products keep attracting customers with their quality. That's why Bulgarian producers must either improve the quality of their goods and packing or reduce the amount of production.

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