AgriPolicy

Enlargement Network for Agripolicy Analysis

ASSESSMENT OF THE
COMPETITIVENESS OF THE DAIRY FOOD CHAIN
IN ROMANIA


FEBRUARY 2009











Work Package WP2: Studies
Deliverable D2.1 Study 1
Coordinator
Authors of this report
Siemen van Berkum (LEI)
PETE ISTVAN, VOLKAN ILDIKO REKA AND TAMAS ERVIN (BABES
BOLYAI UNIVERSITY CLUJ NAPOCA)
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ACKNOWLEDGEMENT


This report forms part of the deliverables from a project called "AgriPolicy" which has been
awarded financial support by the European Commission under the 7th Framework
Programme.

The project aims to establish a network of experts involved in agricultural policy analysis and
rural development in the 12 New Member States and in the 8 Candidate and Pre Candidate
Countries. More information on the project can be found at www.agripolicy.net.












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CONTENT




1 Introduction........................................................................................................................ 4
2 Overview of the sector........................................................................................................ 5
2.1 Sector definition: sector components and importance................................................ 5
2.1.1 Production and value added.................................................................................... 5
2.1.2 Product flows within the sector .............................................................................. 5
2.2 Structural features of the dairy supply chain: present situation and trends overtime. 6
2.2.1 Industry structure at primary level ......................................................................... 6
2.2.2 Industry structure at processing level..................................................................... 7
2.3 Production, consumption and trade developments ..................................................... 8
2.4 Government policy..................................................................................................... 9
2.4.1 Regulatory framework of the dairy sector .............................................................. 9
2.4.2 Other dairy sector relevant policy areas e.g. environment policies, competition
policy etc. ......................................................................................................................... 10
3 Performance of the dairy supply chain............................................................................. 11
3.1 Performance at farm level ........................................................................................ 11
3.1.1 Yields.................................................................................................................... 11
3.1.2 Prices .................................................................................................................... 11
3.1.3 Gross margins....................................................................................................... 13
3.2 Performance at industry level................................................................................... 13
3.2.1 Turnover and employment in the dairy industry.................................................. 13
3.2.2 Value added and profits ........................................................................................ 14
3.2.3 Market share developments .................................................................................. 15
3.2.4 Competitiveness at retail level.............................................................................. 15
4 SWOT............................................................................................................................... 16
4.1 Strengths and weaknesses......................................................................................... 16
4.2 Opportunities and Threats ........................................................................................ 17
5 Suggestions for policy recommendations ......................................................................... 19

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1 Introduction
The aim of this report is to describe and estimate the state and performance of the dairy sector
in each of the countries participating in the Network. The report aims to judge the
competitiveness of the dairy sector, to identify key constraints to competitiveness and to
suggest some key policy interventions to improve the competitive position of the sector. The
dairy sector analysis is undertaken under the FP7 Project Enlargement Network for
Agripolicy Analysis, WP2 on studies. The analysis is aimed at providing scientific input for
policy making. The study wants to contribute to increased knowledge of and insights into the
current situation of the dairy chain in Romania. Assessment of the competitive position of the
sector may induce government actions to either help the sector overcome obstacles for further
improvement or to help the sector to take advantage of business opportunities in providing an
appropriate business environment for this to happen.

The study considers the entire agri-food chain from small-scale production at the farm level
through to processing and retailing activities.

This report covers the following issues:
a description of the dairy sector based upon secondary data covering (trends in)
structural features of (primary) production, imports/exports, domestic consumption,
description of the processing industry and the relevant food retail. See the annex for
proposed tables to summarise the statistical information necessary for this study;
primary data collection using case-studies to illustrate key activities in the sector and
identify lessons for the sectors development;
an identification of key constraints limiting the competitiveness / development of the
sector, based on assessments of a set of performance indicators;
SWOT analysis, identifying the strengths and weaknesses, opportunities and threats of
the dairy sector in Romania
suggestions for policy actions.

The scope of the study may be illustrated by the following proposed structure of the report.
After a brief introduction, section 2 provides an overview of the present situation and
conditions in the primary (milk) production and (dairy) processing. Section 3 further
elaborates on the issue of evaluating factors, which influences competitiveness and efficiency
of the chain. Based on these analyses, the sectors strengths and weaknesses, opportunities
and threats are identified in section 4. Such a SWOT analysis gives the possibility to define
prerequisites and directions for the sectors future development. The recognition of the key
constraints should lead to a series of ideas for policies that may address the obstacles to
further development and help reduce the inefficiencies identified.







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2 Overview of the sector

2.1 Sector definition: sector components and importance
With an area of 238 thousand km2 and a population of more than 21 million inhabitants,
Romania is an important new EU member state in terms of size, although there is a large gap
between this country and the old member states as far as the level of economic and social
development is concerned. Rural areas play an important part in this respect, both by their size
and residential, economic dimensions.

The dairy sector is a significant as part of the national economy because rearing dairy cows is
an important and traditional occupation in rural areas, especially in mountain districts; it
brings regular incomes, contributes to the stability of the labor force in these areas and makes
good use of the pastures and hayfields that cover about 33% of the agricultural land in
Romania. Also, the biological importance of milk and its derived products make them
strategic items on the agri-food market and in the economy.


2.1.1 Production and value added
Agriculture and forestry are important traditional economic branches in Romania, both in
terms of the agricultural area (14.7 million ha) and forest area (6.7 million ha), and in terms of
the population employed in the sector (32 % of total labor force). Since 2000 the contribution
of agriculture and forestry to the GVA in agriculture increased from 8.9 billion leis in 2000
to 24.3 billion lei in 2005 (Table 3 in the Annex). Still in 2005, the contribution of agriculture
and forestry to the GVA registered a significant drop from 13.9% to 9.6% especially because
of poor harvests of major crops.

During 1998-2006 the Gross Agricultural Output recorded a growth also from 9.8 billion lei
in 1998 up to 50.6 billion lei in 2006. (Table 2 in the Annex). The share of animal production
in GAO was around 37.2% in 2006.

Gross Agricultural Output (GAO) has been highly variable since 2000, reflecting mainly
variations in crop yields affected by extreme weather conditions. Livestock production
increased every year since 2001, except in 2005.


2.1.2 Product flows within the sector
The figure below provides an overview of the dairy sector, its components and associated
milk flows.

It should be noted that a major feature of the current Romanian dairy sector is the low
utilization of total milk production by processing enterprises. Farm family consumption, farm
feedings of animals, the milk sold directly by producers through street markets and direct
sales had a major impact in the sector. The high level of farm usage and direct selling is a
consequence of several factors, which include the small-scale structure of production, a
consequential lack of commercial orientation amongst many producers, an underdeveloped
milk collection system, the big difference between the procurement price and the street
market price, and the unreliability of milk payments made by some processors with delays in
payment to producers of up to 3 months. A major challenge in the commercial development
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of the dairy sector will be to increase the supplies of good quality raw milk to the processing
sector in a cost-effective manner.



Figure 1 Overview of Romanian milk sector and milk flows, 2007
Source: Authors estimation based on the data of National Institute of Statistics, Romania


2.2 Structural features of the dairy supply chain: present situation and
trends overtime
2.2.1 Industry structure at primary level

Romania has a very pronounced dual farm structure. Close to 45% of land is farmed by
agricultural companies, which account for 0.5% of all farms and have an average size of 275
hectares. However, the vast majority of Romanian farms are subsistence and semi subsistence
farms (97.5% of the total), which occupy around half of the utilized agricultural area. Another
2% of farms are commercial family farms, which occupy 4.1% of farm land. According to
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Eurostats 2002 structural survey, close to 3.3 million farms were under 1 European Size Unit
(1 ESU = EUR 1 200 of standard gross margin) in Romania. They occupied 3.9 million
hectares or a quarter of all agricultural land. There were 1.2 million farms with standard gross
margins over one unit, which accounted for 27% of all farms and occupied the remaining
three-quarters of agricultural land. Their average size was 8.8 hectares and 94% of those
farms were under 8 ESU. Farms over 100 ESU occupied close to 25% of agricultural land.
Most farms over 1 ESU (89%) were mixed crop and livestock operations. On average, they
had less than 2 cows and 16 sheep. Main occupation farms accounted for 89% of farms over 1
ESU. Seventy per cent of farmers were over 55 and only 5% under 35
1
.

Romanian milk production has traditionally been concentrated in the private sector. The dairy
sector has gone through an important structural change in the last years. In 1990, 56% of total
milk production came from private family farms. By 2001 the share of family farms had
grown to 97%, whilst that of state farms was 2% and other large (privately-owned) farms 1%.
Nowadays milk production is very much focussed on small scale, family units. (Annex Table
5).

The privatization process at farm level resulted in a very fragmented farm structure. In 2006
93% of farms have 1-2 cows (Annex Table 5). These farms have 75% of all milking cows.
5,7% of farms have 3-5 cows and 0,59% farms have over 11 cows (until 100). Only 0.01% of
all farms (164 in number) have 100 cows or more. These farms have 6,4% of all milking cows
from Romania.

According to the data of the Ministry of Agriculture and Rural Development and the General
presentation of Romanias agriculture and rural developement 2008 report in 2005 there was
encountered a number of 12510 agricultural entities. 85% of these agricultural entities have 0-
49 number of employees, 12% have 50-99 employees, 2% have over 100 employees and only
1% of the mentioned entities have over 250 employees. (Annex Table 6.2)



2.2.2 Industry structure at processing level

At processing level, few information are available. The current industry consists of ex state
firms that have been privatised, plus a developing small-scale private sector, which increased
since 2000. Simultaneously, many new dairies have been established over the years. Foreign
investors and multinational diary companies invested in and took over the Romanian ex state
diary companies and transformed them into competitive companies. After Romanias EU
integration many milk processing units and diary companies have ceased to exist due to the
harsh regulations regarding production standards, foods safety and quality.

In 2007 there were around 876 dairies in total. Most of them are very small in terms of
number of employees: 818 enterprises are reported to have less than 50 employees, 19 dairies
have more than 50 employees, 23 diaries have less then 249 employees, and just 16
enterprises have over 250 employees. (Annex Table 6.1) However, there is no information
about the estimated intakes per year/per day, the quantities these dairies purchase or process.


1
Agricultural Policies in Non-OECD Countries Monitoring and Evaluation 2007, OECD 2007

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An important aspect of Romanian dairy sector is that foreign investment has entered the
sector, especially from The Netherlands, France, Germany, Israel and Switzerland. Some of
the foreign owned companies belong to the larger dairy processors in Romania. Table 7
presents a list of the largest dairy companies in Romania, the ownership, turnover in 2007,
number of employees in 2007 and the estimated intake per day (where available). Most of
these companies have several factories and produce in different locations across the country.

Three of the companies presented, Danone, Friesland and Hochland are foreign owned and
only two companies (from top 5) are domestic. Still Friesland has shares in Napolact so in this
case only one firm, Albalact, is native Romanian company.

The structure of the dairy industry is changing rapidly. The outlook of EU accession calls,
among others, for complying with EU quality norms and standards.


2.3 Production, consumption and trade developments
Production
According to the data of Romanian Statistical Yearbook and the Ministry of Agriculture and
Rural Development the total milk production, including cow and buffalo milk, sheep and goat
milk together (calves feeding included) has been increasing especially since 2000 (Table 4).
In 2000 there was a 5017 million ton of milk production and reached out to 6278 million ton
of milk in 2006.

The trends in the production of fresh consumption milk, fresh dairy products, butter and
cheese, and are presented in Annex Table 9.

Consumption
The levels of milk consumption per capita (expressed in milk equivalents) remained stable
between 1998-2001 at an average of 194.7 kg per year. The level of milk consumption
increased gradually during 2001 2006 (see Annex Table 12.2).

Unfortunately, the authors could not access a breakdown into separate dairy products, like
cheese, butter, skimmed milk powder, or fresh dairy products among Romanian data available
(ex. Romanian Statistical Yearbook). The lack of disaggregated consumption data implies that
nothing can be said about consumption patterns.

Nevertheless, data was found and gathered from OECD statistics. Table 12.1 in the Annex
shows the level of consumption (in thousand ton) of drinking milk, butter and cheese between
1998 and 2006.

Trade developments
In the National Statistic Institute and Ministry of Agriculture there are surprisingly just a few
information referring to the trade details. Figures were only available for the totals on exports
and imports. The authors found data about the export and import of food and live animals, and
the export and import of dairy products and birds eggs. Table 10.1 in the Annex shows that
the share of diary products in total export is around 0,06 %, and the share of diary products in
total imports is around 0.15%. In 2007 the main exported dairy products were milk and sour
cream meanwhile the main imported dairy product was cheese (Annex Table 10.2)

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The figures from Annex Table 11 show that the European Union is the main partner of
Romania in agricultural trade. In 2007 the export of agro-food products to EU weighted 70%
of total exports while imports from EU member states weighted 72,4% of total imports.

Moreover, there are quite substantial levels of imports on the fresh dairy products since 1998
(from 10 to 15%). Some sources indicate that the rise in these imports is linked to FDI as
companies like Danone or Hochland producing in Romania - are also importing part of their
fresh product range. Further, imports on milk powder are substantial as a share of production,
and the same holds for cheese. At the same time, exports of milk powder and cheese have
been growing in recent years. Yet, the level of import and export penetration is still rather
modest.


2.4 Government policy
2.4.1 Regulatory framework of the dairy sector

One of the main long-term objectives of the Government is to modernize and raise the
efficiency of the existing farms according to EU standards. Policy programs also include the
establishment of rural credit cooperatives to help finance to the transformation process of the
traditional farms into family farms. Another objective is to increase the number of farms and
agri-food units eligible for SAPARD funds. Price support, input subsidies and area based
direct payments to agricultural households with less than 5 hectares form part of the policy
measures. Rural area development and land consolidation could be aided by a pension
supplement for those above retirement age, who agree to release their land to allow an
accelerated restructuring of the sector. The development of infrastructure, training programs,
development of human resources, improving the access to markets and competitiveness of
products are other key elements in rural area development. An important aim is also
encouraging the internal investments in small and medium sized processing firms situated in
rural areas.

The major measure that the Government has applied to the dairy sector in recent years has
been a premium on milk delivered to processors. The Governments objective with this
measure is to increase the quantity of milk delivered for processing. As a side effect, the
Government expects the development of the productions quality. However, the way this
measure would encourage higher milk quality is not explicitly explained in the Governments
draft law. To argument may be that in order to get milk accepted by processors a farmer has
to make additional efforts for which the premium has to compensate. The bonus is available
on the condition that producers hold 15 milk animals or more, or that they belong to an
association meeting this criterion. However, some moderation should be made to this
condition in order to enable mixed farms with fewer cows to be eligible.

Other relevant government competition policies refers to the following:
1.) Improving the quality and hygiene of milk and milk processing industry to reach the
EU quality standards - by giving financial support to agricultural producers in the zoo-
technical industry, to farmers, producers who:
own, breed animals individually or in association;
delivers cow milk from farms to milk collection centers and dairy processing
centers;
own private milk collection centers or milk processing units.
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2.) SAPPARD programs. The SAPARD (Special Accession Program for Agriculture and
Rural Development) is a EU program, which provides financial and technical assistance
for agriculture and rural development in candidate countries as they prepare for EU
accession. SAPARD funds investment projects:

Priorities for SAPARD assistance include:
Implementing veterinary, phytosanitary and marketing requirements.
Upgrading food processing standards.
Restructuring the agri-food sector to improve competitiveness.
Implementing coherent structural and rural development policies.


SAPARD eligible measures include:
Investments in agricultural holdings.
Improving processing and marketing, structures for quality, veterinary and plant-
health controls.
Agricultural production methods protecting environment and maintaining the
countryside, economic diversification.
Setting-up farm relief and farm management services, producer groups.
Renovation and development of villages.
Land improvement and reparcelling, creating and updating land registers.
Improving vocational training, developing and improving rural infrastructure, water
resource management, forestry measures and technical assistance.


2.4.2 Other dairy sector relevant policy areas e.g. environment policies, competition
policy etc.

Romanian farmers seized the opportunity offered by organic farming and embark into these
farming methods. In compliance with the European Action Plan for Ecological Agriculture,
the National Strategic Plan takes into account the development of organic farming. Organic
farming is an important instrument in nature conservation and revival of rural areas. These
aspects have a great importance for Romania, where it was identified the need to maintain the
natural value of farmland and the need of an equilibrated rural development. Organic farming
could lead to environmental, economic and social benefits for these areas.
2


The agricultural area cultivated with organic crops has increased 5 times between 2000 and
2004, respectively from 17,348 ha to 75,500 ha. Of the total area cultivated with organic crops
in 2004, the largest share, 27,000 ha, represents natural grasslands and feedstuff crops. A
rapid upwards trend could be noticed for cereals crops (27.95 in 2004) as well as for oilseed
and protein plants (27.2% in 2004). For 2005, the areas cultivated with organic crops were
estimated at 110,000 ha, representing 0.75% out of the country of agricultural area. Organic
farming methods are gradually adopted by livestock farming. The development of organic
farming in Romania is favored by the existence of traditional agricultural systems, extensive
in their majority, and the fact that the average use of chemical fertilizers and pesticides is
lower than in EU (25)
3
.

2
National Strategy Plan 2007-2013
3
idem
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3 Performance of the dairy supply chain
3.1 Performance at farm level

3.1.1 Yields

The general picture for the Romanian dairy sector is that yields are increasing but slowly.
Total production has not moved up much as the cowherd decreased slightly over the years
thanks to the assistance programmes given by the government. Still on a dairy company level,
it is hard to identify any impact on intake per farmer. The number of farmers receiving
assistance is pretty low.

Table 13 and 15 in the Annex show that there were 2.8 million holdings in the EU-27 with
dairy cows in 2005. However, 1.9 million holdings only had between one and two cows,
Romania and Poland accounting for 1.6 million of these small dairy units.

Among those Member States for which data are available, the number of farms with dairy
cows declined sharply between 1995 and 2005; in Italy, the number of holdings with dairy
cows halved and in Spain the number fell by almost two thirds. Although the number of cows
(of which organic dairy cows comprise a very small proportion) also declined in the same
period, the average number of cows per holding increased, sometimes sharply. In contrast to
the small herd sizes in Romania and Poland, the average size of a dairy herd in the United
Kingdom was just under 80 head in 2005, had risen to 85 head in Denmark, and was just over
100 head, on average, in Cyprus.

Average milk yields across the EU-27 in 2005 were about 6 000 liters per cow, although the
range extended from 8 200 liters per cow in Sweden and Denmark down to 3 700 liters per
cow in Bulgaria and 3 000 liters per cow in Romania.

With respect to the poor genetic potential of a part of the dairy herd, the policy towards
Artificial Insemination may have had an important influence. With the privatisation of the
Artificial Insemination Services in 1997, the farmers were charged for this service, which
they had received free of charge until 1997. Since then, farmers have been tempted more to
use local bulls of low quality, through which the genetic quality of cattle has been gradually
degraded. This has been reinforced by the fact that in some regions the quality of the semen,
as well as the level of professionalism of the servers, has been low. Consequently, some
farmers have lost confidence in the AI service. In places, the bulls (of lower quality) are just
left to graze within the herd and the consequence is a further degradation of genetic potential.

3.1.2 Prices

Table 16 in the Annex presents the average purchasing price, paid to farmers, for cow milk in
Romania between 2000 and 2007. Prices incresed from 0.28 Ron per litre of milk in 2000 up
to 0.75 Ron per liter of milk in 2007.

Nowadays we are still facing the fact that farm gate prices are still low and small farmers
especially, preferred to sell their milk directly to consumers because the prices are
significantly higher and they are paid on the spot, with none of the delays which frequently
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occur when delivering to processors. Farmers are in a weak negotiating position relative to the
processors because there are too many producers and their associations are not effective
enough; furthermore, most of the collection centers are owned by the processors.

Milk producers receive a payment per liter of milk sold to economic operators specialized in
milk processing and having an appropriate producing license, without an upper limit on the
quantity of milk receiving payment. Payments per liter of cow and buffalo cow milk increased
in 2002, compared to 2001, and remained stable in national currency until 2005, despite high
inflation. They increased by 10.7% in national currency (17% in EUR) in September 2005. In
September 2006, the Government announced that the payment rate for milk which reaches EU
standards will double.


Figure 2 - Evolution of payment rates in Romania, 2001-06
Source: Gavrilescu (2006); AgraFood East Europe;
Agricultural Policies in Non-OECD Countries, Monitoring and Evaluation 2007, OECD 2007

In January 2006, the government decided that milk payments would no longer be paid per
liter of milk but per head of dairy animal, with a supplementary aid for registered organic
farms or for pedigree animals.

The enlargement of the European Union from 15 to 25 Member States in 2004 resulted in a
significantly larger volume of cows milk collected and of milk products obtained. The further
enlargement to 27 Member States in 2007 produced a much smaller increase. Nevertheless,
the 15 Member States which made up the EU between 1995 and 2004 still account for more
than 80% of the cows milk collected and products obtained from cows milk.
4



Figure 3 - Cows milk collected, % EU-27, 2007
Source: EUROSTAT Agricultural Statistics. Main Results 2006-2007



4
EUROSTAT Agricultural Statistics. Main Results 2006-2007
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Table 17 in the Annex provides a comparison of milk producer prices in EU states and those
in Romania over the years 1999-2007. The Romanian peasant market price also relates to
milk that is probably far below the EU quality standards that have to be achieved by farmers
in the Member States to obtain the EU farm gate prices. It seems unlikely that without
significant price support Romanian dairies could offer procurement prices that match those
obtainable on the Romanian peasant markets.

Milk prices received by farmers for processing milk in Romania is typically less than half that
which prevails in EU countries. This suggests that at the farm gate level Romanian milk is
price competitive with that in the EU, but the question of international competitiveness
depends on the prices of products which are readily tradeable, i.e once the milk has been
collected and is in a form suitable for international transfer. It should also be noted that the
quality of Romanian milk is probably below that in the EU.

The quantity of milk produced in the EU-27 is controlled by a system of production quotas.
The milk quota for the EU-25 was set at 138 million in 2006 to which a further total of 4
million ton of quota were added for Romania and Bulgaria in 2007. Most dairy farmers sell
their milk to dairy processors and it then enters the food chain. Other dairy farmers market
their milk directly to consumers and on some dairy farms milk is consumed on the farm. Of
the 148.1 million ton of milk produced across the EU-27 in 2006, the vast majority (89.5 %)
some 132.5 million ton of milk was collected. In some of the newer Member States
(particularly those in Eastern Europe) a significant proportion of milk production is consumed
on the farm; only about one fifth (21.4 %) of milk produced in Romania was collected. Over
two thirds (70.4 %) of the milk collected in the EU-27 came from Germany, France, the
United Kingdom, the Netherlands, Italy and Poland.
5



3.1.3 Gross margins

The question of whether an enterprise is capable of producing a positive margin is an
important element of competitiveness.


3.2 Performance at industry level

3.2.1 Turnover and employment in the dairy industry

Romania has received some investors in the dairy sector since 1998 when Danone came in.
Since then, several foreign companies have followed, such as Friesland (former Nutricia
group, Netherlands), Hochland (Germany), and Dorna Lactate (Switzerland). These
investments show that foreign companies see good prospects in the Romanian dairy market in
the longer term. There are several important impacts on the Romanian dairy sector that can
already be identified as arising from these foreign investments. One clearly observes that the
competition in the market has increased. More firms with better products are entering the
market and competing with the existing established businesses. Increased competition from
internationally operating companies has encouraged several developments. More competition
has fuelled a growing tendency of specialization in the sector.

5
EUROSTAT, Food: from farm to fork, Pocketbooks statistics, 2008 Edition

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Annex Table 7 shows the list of large diaries companies. We can observe that the foreign
investors in the Romanian sector are among the first. The first four in the list are foreign
investors. Danone continues to be the most important player in the market with a 102 million
euro turnover and 685 employees. Danone is followed by Friesland Romania member of the
international Friesland Foods Dutch company. In 2007 Friesland Romania had a 75 million
euro turnover and had 771 employees. The fifth large diary company is Albalact a domestic
company. With 564 employees in 2007 the company achieved a turnover of 42 million euros.

Farm employment in Romania is characterised by a high proportion of older people. The older
members of the farm population are likely to have lower educational qualifications, a lower
level of commercial orientation (self consumption may be more important than sales) and less
motivation for farm business improvements.

Regarding the education levels of farmers we can say that many of them have just primary
level education, just a few have higher or university education. An inevitable consequence of
this low level of education is that farmers are less well equipped to compete in labour markets
and to gain non-agricultural employment. This impedes the structural adjustment of the
agricultural sector and milk production (the move towards fewer farmers and workers
operating on larger units). The low levels of education also suggest a low level of knowledge
and skills, which are required for raising milk production and its quality, and for the better
management of farm enterprises.

3.2.2 Value added and profits

Until privatization started, every dairy unit produced the whole range of dairy products, in
order to utilize all the milk delivered and to serve the local community with a full range of
products. Pressure from competitors has forced processors to use scarce resources on as large
a scale as possible, and to concentrate on processing fewer products is one way of achieving
this. The increased competition has already had, and will continue to have an impact on the
numbers of small-scale producers and these will reduce. Furthermore, the foreign investment
has resulted in an increasing number of products being available to the consumer. Moreover,
as these companies want to accept only milk of good quality, they will initiate further efforts
to implement strict quality standards right along the dairy chain.

Looking at changes in performance with valuations expressed in current prices, the larger
companies have expanded their capital base, as their stock value more than doubled in 1999
against the previous years value. The larger companies show an increase in turnover over the
period, both in total and per employee. At the same time, gross value added has risen, as well
as operational incomes (total sales minus variable costs). Importantly, the investments made
have risen, which indicates positive business expectations.

Still, Results per dairy may differ substantially, and depend, amongst others things, on their
scale and efficiency of resource use their product quality and range, and on management and
marketing skills




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3.2.3 Market share developments

As we mentioned earlier Romania has received major foreign investors especially from
Europe. Because of these foreign investments the competition on the Romanian dairy market
increased considerably. More and more products are entering the market and are competing
with the existing ones.

The Romanian dairy market has also domestic companies. Former state-owned processing
companies made a successful transition to being a competitive private enterprises.
Investments has been made in the milk collection system and good quality milk is rewarded
within the pricing system. Effort has also been put into the development of quality systems
within the factory and international markets have been developed. Further improvements in
the milk supply are also being planned.


3.2.4 Competitiveness at retail level

Annex Table 18 presents an example of retail prices of dairy products observed in a major
supermarket in Northern Romania, September 2008.

One broad observation is that the products of foreign manufacturers, whether imported or
produced in Romania, have a high price. An element of these high prices is due to the inherent
quality of the products, but part of the price premium is due to the perceived value imparted to
the products by their well-regarded brands.

A second observation is that there is a difference in the prices of similar products produced by
different Romanian producers. It would appear that some Romanian producers are seeking to
compete at the quality end of the market, but cannot achieve the prices of foreign competitors,
whilst others are seeking to be very price competitive. This pattern can also be observed in
other outlets.

In conclusion the competitiveness of the Romanian diary industry is clearly handicapped by:
relatively low levels of skills and education amongst the farm workforce
a very small scale of production which is very labour intensive and makes relatively
limited use of capital
low average yields which in many instances are below the genetic potential of the
cows concerned because of deficiencies in feeding and husbandry (the need to
increase the genetic quality of the herd is not denied, but the issue is complicated by
the need for improved husbandry and feeding with higher yielding cows)
inadequate attention to milk quality at the farm level, in milk collection and pricing,
and in the regulatory arrangements for street markets
a milk collection system that is very fragmented, has a shortage of cooling facilities
in many areas and is dealing with small quantities at many points as milk flows from
farm to processor.

In addition, it has been observed that milk prices for Romanian producers are approximately
half those of EU producers, gross margins for milk production are very low relative to EU
states, but the nature of production is very different and the milk collection system is capable
of improvement at modest cost to producers if appropriately organized.

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As far as the milk processing sector is concerned:
the industry is generally very fragmented
in recent years dairy processors appear to have raised their labour productivity and
broadly maintained their performance levels
the influence of foreign investment and competition has provided a stimulus for
product development and the raising of milk quality
much improvement is still required in raising standards and performance levels


4 SWOT
4.1 Strengths and weaknesses

Usually the SWOT analysis gives the possibility to define and identify the strengths and
weaknesses, opportunities and threats and also the direction of the sectors future
development.

As shown by the results of different surveys, the main issues in Romanian agriculture are: a
very large sector of subsistence and semi/subsistence agriculture (made up of small individual
holdings5), poorly equipped, with a relatively low yield, making an incomplete use of the
owners, work and using most of the production of their own consumption. This situation is
counterweighted by the large commercial holdings, made up of concessional or rented plots
(covering more than half of the area), which are relatively well equipped, with high yields, but
which still do not use the land to its true potential.

The Romanian dairy sector faces several negative effects from the general macroeconomic
environment in Romania. Consumer incomes are still relative low, which gives relatively low
consumer spending power and that is why consumers have low product expectations. Another
negative effect or weakness is the low quality of milk collected and the reduced productivity
at farm level. Low labor costs gives Romania a favorable point.

STAGE STRENGHTS WEAKNESSES
Market/macro
environment
Larg land resources with high
agricultural potential
Low level of consumer
incomes gives low level of
consumer spending power
High interest rates
Lack of information on
industry structure

Farm level Low labor costs Small scale structure of milk
production
Low milk production
Low milk yields
Poorly organized system of
milk collection
Lack of quality and hygiene
orientation
Lack of farm investments
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Inadequate payments, unstable
payment arrangements (delays)
Lack of market orientation
High costs in small- and
medium size farms
Incapacity of small- and
medium sized farms to invest
for modernization
Low genetic potential of cows
High level of self-consumption
and peasant market sales

Processing Low milk production costs Low productivity and
profitability
Foreign investments lead to the
modernization of the sector
High costs of milk collection
Implementing new and modern
technologies of milk processing
Low levels of product
development
Low and poor financial support
for production and export

Street markets Provides availability of low
prices for low income consumers
Low hygienic quality of
products
Provides security of payments
for small scale producers
(farmers)
Poor handling procedures

Wholesaling and
supermarkets
The number of participants is
increasing
Difficult to achieve any
economies of scale
Ensuring expansion of milk and
dairy products supply
High prices for mediocre
quality
Good range of products
Generally good standards of
service

Higher levels of efficiency


4.2 Opportunities and Threats

The SWOT analysis also indicates the scope for adjustment, which will strengthen the
sectors competitive position on both domestic and foreign markets. At the farm level,
opportunities to improve efficiency and quality are mainly to be sought in better feeding and
hygienic practices. Investments, either from own resources or through investment assistance,
in animals, their housing and feed storage will affect production and productivity positively.
A major threat to the sector is that it fails to meet the growing quality requirements and
standards all along the dairy chain.

STAGE OPPORTUNITIES THREATS
Farm level Improving the quality of milk Lack of alternative
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by providing advice and training
on hygienic conditions and
procedures
employment opportunities in
rural areas
Investments in animals with
high genetic potential
Failure to meet Aquis
requirements related to quality,
hygiene, animal welfare
Training courses and advices on
cow nutrition, improving the
cows feed diet efficiency
Incapacity to meet the growing
needs and standards both on
European and international
level
Improve the payment
possibilities regular payments
High competitiveness on the
international markets
Investing in buildings and
equipment


Processing Raising the quality and quantity
of milk by investing in
equipments and modern
technology used in the milk
collection systems
Failure to meet Aquis
requirements
Improving the payment systems Incapacity to meet the EU
standards and miss the
harmonization process
Increasing the product
improvement by knowing the
market and consumer demands
and consumer spending power
Changes in consumer
preferences focused on organic
farming and organic products
Improving the efficiency of the
milk sector by restructuring the
sector
Poor business environment
through inappropriate policy
development and
implementation
Further foreign investments Continued weakness of
Romanian economy
Harmonization with EU
standards

Making efforts to cope with
environmental requirements




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5 Suggestions for policy recommendations

Development measures for increasing competitiveness of the Romanian dairy sector need to
take in consideration the trends on the international dairy market and international trade
policy in order to contribute to its efficacy and profitability.

The Romanian dairy sector is characterized by low competitiveness and this can be attributed
to: low production output, low average milk production per cow as a result of unfavourable
cattle breed, type of breeding and nutrition but also due to an unfavourable family farm
ownership structure.

In this way there is a need to make changes both in the production and market structure of the
Romanian dairy sector in order to overcome low price competitiveness, and lack of quality
and marketing competitiveness.

Government policies in a number of fields such as quality standards, milk production,
development of dairy industry, could help to complement and increase the effectiveness of the
companies farm assistance programmes and at the same time address the issue of
competitiveness of the sector. Some recommendations for policy change and government
involvement are as follows:

Suggestions for improving the milk production process:
increasing the investments in cattle breeding in order to increase de milk production;
improving the genetic potential of farms;
sustaining the milk production sector, to assure a quantitative and qualitative
improvement, in order to align it to the standards of the European Union;
subvention for the milk production to balance the price at the collection sites, on the
same criteria as in the European Union;

Suggestion for improving the milk processing industry:
modernization of the existing milk processing units;
setting up collection, cooling and storing units;
increasing de added value of the sub-products resulting from the processing activity;
improving the monitoring and control systems of the supply chain;
setting up new laboratories and modernizing the existing ones;
diversification of the milk products;
improvement the professional training of the personnel involved in the milk
production, processing and marketing of milk products.

Programs to sustain the milk products
sustaining and protecting the domestic products using the EU specific mechanisms;
balancing the production and the processing activities;
financial support to balance the price at the collection sites in Romania with those in
the EU.


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Annex to the Dairy Sector Analysis


Table 1. Gross domestic product by category of resources
2001 2002 2003 2004 2005 2006 2007*
GDP - TOTAL 116.768,7 151.475,0 197.564,8 246.468,8 288.047,8 344.535,5 266.590,6
Agriculture, hunting
and sylviculture
15.612,9 17.301,2 22.835,2 31.030,1 24.277,9 26.898,2 17.806,8
% of GDP 13,4 11,4 11,6 12,6 8,4 7,8 6,68
Source: Romanian Statistical Yearbook 2007, * Estimates

Table 2. Share of milk production in total Gross Agricultural Output (GAO), 10 most recent
years

1998 1999 2000 2001 2002 2003 2004 2005 2006
Total GAO
(Thou lei
current prices)
9768964 12716501 16071284 27842836 31584856 40411820 55314136 46539540 50649602
Share of animal
production in
GAO (%)
43.90 34.50 37.10 36.10 41.60 34.90 30.40 39.10 37.20
Share of milk
production in
GAO (%)
17.3 16.0
Source: Romanian Statistical Yearbook 2003-2007

Table 3. Share of Gross value Added (GVA) of the dairy industry in total food and beverage
industry GVA, ten most recent years
1998 1999 2000 2001 2002 2003 2004 2005
Total GVA in agriculture
(lei million current prices)
5375,3 7277,6 8898,4 15612,9 17301,2 22835,2 31030,1 24277,0
Total GVA in food and
beverages industry
(lei million current prices)
22.384 30.380,8 5425,5 8640,2 9882,8 12.128,4 14.818,1 17.166,7
Dairy production GVA
(euro or national currency)

Share of GVA of the dairy
industry in total food and
beverage industry GVA - (%)

Source: Romanian Statistical Yearbook, 2007

Table 4. Milk production production flows within the chain

Milk production th hectolitres 1998 1999 2000 2001 2002 2003 2004 2005 2006
Cow and buffalo milk, sheep and
goat milk (calves feeding included)
54336 52563 51630 53169 55146 57736 59818 60614 64607
Cow and buffalo milk, sheep and
goat milk (calves feeding excluded)
47197 45607 44831 46367 48325 50600 53386 53852 57886
Cow and buffalo milk (calves feeding
included)
50902 49249 48518 50036 51800 54199 55444 55334 58307
Cow and buffalo milk (calves feeding
excluded)
43763 42292 41719 43233 44980 47063 49012 48572 51586
Source: Romanian Statistical Yearbook, 2007

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Milk production
0
10000
20000
30000
40000
50000
60000
70000
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
Cow and buffalo milk,
sheep and goat milk
(calves feeding
included)
Cow and buffalo milk,
sheep and goat milk
(calves feeding
excluded)
Cow and buffalo milk
(calves feeding
included)
Cow and buffalo milk
(calves feeding
excluded)
Series5

Figure 2 Milk production between 1998 - 2006



Table 5. Size structure of the livestock farms at 31.12.2006
FARMS COWS
Specification No. of
farms
% of
total
Cum.
%
No. of
head
% of
total
Cum.
%
Average
head / farm
TOTAL 1.100.000 100.00 1.700.000 100.00 1.55
1-2 heads 1.023.000 93.00 93.00 1.286.900 75.70 75.70 1.26
3-5 heads 62.700 5.70 98.70 210.800 12.40 88.10 3.36
6-10 heads 7.700 0.70 99.40 59.500 3.50 91.60 7.73
11-100 heads 6.436 0.59 99.99 108.800 6.40 93.72 16.91
>100 heads 164 0.01 100 34.000 2.00 100 207.31
Source: MADR

Table 6.1 Size distribution of dairy industry, in number of employees in 2007
Size band,
in numbers of employees
Number
of Enterprises
0-49 818
50-99 19
100-249 23
Over 250 16
TOTAL 876
Source: MADR, Ministry of Agriculture and Rural Development, General presentation of Romanias agriculture
and rural developement (2008)

Table 6.2 Size distribution of agricultural entities, in number of employees
Size band,
in numbers of employees
Number of Enterprises
2005 2006
0-49 10623 11467
50-99 1594 1606
100-249 252 233
Over 250 41 41
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TOTAL 12510 13347
Source: MADR, Ministry of Agriculture and Rural Development, General presentation of Romanias agriculture
and rural developement (2008)

Table 7. List of large dairies companies (top 5), with their milk intake or processing
capacity)
Estimated intake per day Name of the
company
Ownership Turnover
2007
Number of
employees
2007
in litres As % of
total intake
Danone Romania Private/
Subsidiary
102 million
euro
685
Friesland Romania Private/
Subsidiary
75 million
euro
771 170 mil
litres/year

Napolact Private 53 million
euro
466 45 mil
litres/year

Hochland Private/
Subsidiary
47 million
euro
416
Albalact Private 42 million
euro
564 200.000
litres/day

Source: Ministry of Public Finance (www.mfinante.ro)
APRIL - Asociatia Patronala Romana din Industria Laptelui (www.april.org.ro) (The Romanian Milk
Producers Entrepreneurship Union)



Table 8. Supply/demand balance sheet on dairy products (in 000 ton equivalent of 3.5%
fat milk) (ten most recent years)
1998 1999 2000 2001 2002 2003 2004 2005 2006
Production
(th litres)
43763 42292 41719 43233 44980 47063 49012 48572 51586
Imports (euro
million)

29 33 31 31 32 42

Exports (euro
millions)

8 10 9 10 14 17

Stock
variation

Supply
available

Human
consumption

Av. Cons. Per
capita
194,40 194,00 193,00 197,40 215,00 225,00 238,90 239,20 246,60
Self-
sufficiency
rate (%)


Table 9. Trends in dairy production (ten most recent years)
1998 1999 2000 2001 2002 2003 2004 2005 2006
Fresh consumption
milk (thou hl)
1864 1750

1608 1168 1281 1442 1577 1600 1665
Fresh milk products
3,5% fat (thou hl)
825 922 905 1306 1665 1740 2708 3171 3072
Butter (thou ton) 7 7 6 7 5 6 7 8 8
Cheese products
(thou ton)
37 31 29 36 43 49 53 61 67
Source: Romanian Statistical Yearbook, MADR
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Table 10.1. Export and import of dairy products by sections to Standard International
Trade Classification
Exports (FOB) by sections euro millions
2000 2001 2002 2003 2004 2005
Total exports
(FOB)
11273 12722 14675 15614 18935 22255
Food and live
animals
268 358 359 344 404 489
Dairy products
and birds eggs
8 10 9 10 14 17
Share of dairy
products in total
exports %
0,07 0,07 0,06 0,06 0,07 0,07
Source: Romanian Statistical Yearbook 2006

Imports (CIF) by sections euro millions
2000 2001 2002 2003 2004 2005
Total imports
(CIF)
14235 17383 18881 21201 26281 32568
Food and live
animals
774 1060 905 1204 1297 1528
Dairy products
and birds eggs
29 33 31 31 32 42
Share of dairy
products in total
imports %
0,20 0,19 0,16 0,14 0,12 0,12
Source: Romanian Statistical Yearbook 2006

Table 10.2 Export and import of main dairy products in 2007

EXPORT
Quantity (th ton) Value (Euro
million)
Share in total %
Dairy products
2006 2007 2006 2007 2006 2007
Total 854.00 1100.70 100 100
Milk and sour 0.90 9.60 1.00 12.90 0.10 1.20

EXPORT
Quantity (th ton) Value (Euro
million)
Share in total %
Dairy products
2006 2007 2006 2007 2006 2007
Total 2424.80 3255.10 100 100
Cheese 5.10 18.50 15.40 56.50 0.60 1.70

Source: MADR, General presentation of Romanias agriculture and rural developement (2008)

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Table 11. Foreign trade totals, main destination of exports and main origin of imports,
by main countries/regions between 1999-2005
1999 2000 2001 2002 2003 2004 2005
Export total (euro million) 7977 11273 12722 14675 15614 18935 22255
Europe 6704 9566 10825 12098 13353 16605 18935
Italy 1858 2518 3172 3670 3774 4014 4270
Germany 1413 1765 1988 2293 2458 2832 3123
France 498 790 1025 1121 1145 1609 1656
Turkey 442 682 503 611 798 1324 1762
UK and Northern Ireland 388 592 654 849 1046 1259 1213

Import total (euro million) 9927 14235 17383 18881 21201 26281 32568
Europe 8205 11481 14196 15576 17965 21586 26056
Italy 1942 2656 3470 3911 4140 4515 5032
Germany 1731 2093 2644 2805 3145 3918 4550
France 661 873 1093 1206 1542 1866 2196
Turkey 223 296 421 592 815 1098 1583
UK and Northern Ireland 417 581 603 722 702 860 934

Source: Romanian Statistical Yearbook 2006

Table 12.1 Consumption of main dairy products (milk and other dairy products) ten
most recent years (graph or a table).

Level of
consumption
(th ton)
1998 1999 2000 2001 2002 2003 2004 2005 2006
Drinking milk 32893 32846 28308 32776 32587 32595 32561 32001 32650
Butter 1924 1878 1880 1871 1894 1896 1881 1869 1869
Cheese 6417 6522 6243 6847 6871 6889 7149 7174 7276
Source: OECD

Table 12.2 Yearly average consumption for dairy products per inhabitant
1998 1999 2000 2001 2002 2003 2004 2005 2006
Milk and dairy
products in
equivalent milk
3,5% fat (butter
excluded)
194,40 194,00 193,00 197,40 215,00 225,00 238,90 239,20 246,60
Source: Romanian Statistical Yearbook 2007


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Table 13. Cow numbers, average herd sizes, and milk yields in the country at hand and in the
EU(27) member states, in 2006

Country Number of
holdings with
dairy cows
(units)
Number of
dairy cows
(1000 head)
Average
number of
dairy cows

Average Cow
Yield (litres
per cow p.a.)
Belgium (BE) 15.180 549 36.20 5244,08
Bulgaria (BU) 152.560 357 2.30 2123,25
Czech Republic 6.780 441 65.00 5564,63
Denmark () 6.630 564 85.10 8005,32
Germany (DE) 110.370 4.236 38.40 6446,41
Estonia (EE) 9.210 115 12.50 5165,22
Ireland (IE) 23.820 1.082 45.40 4843,81
Greece (EL) 9.780 168 17.20 3857,14
Spain (ES) 42.390 1.002 23.60 5705,59
France (FR) 103.850 3.884 37.40 5899,59
Italy (IT) 61.020 1.860 30.50 5424,73
Cyprus (CY) 240 24 101.00 6000,00
Latvia (LV) 50.900 172 3.40 3668,60
Lithuania (LT) 170.790 494 2.90 2732,79
Luxembourg (LU) 970 39 40.60 6641,03
Hungary (HU) 16.250 287 17.70 5017,42
Malta (MT) 180 7 40.40 5857,14
Netherlands (NL) 23.530 1.433 60.90 7493,37
Austria (AT) 54.580 536 9.80 4964,55
Poland (PL) 727.100 2.854 3.90 3060,27
Portugal (PT) 15.860 287 18.10 6397,21
Romania (RO) 1.134.400 1.658 1.50 689,99
Slovenia (SI) 19.710 131 6.60 4045,80
Slovakia (SK) 13.460 193 14.40 4994,82
Finland (FI) 16.940 319 18.80 7188,09
Sweden (SE) 8.550 393 46.00 7597,96
United Kingdom (UK) 26.310 2.065 78.50 6608,72
TOTAL 2.821.360 25.151 8.90
Source: EUROSTAT, Statistics in focus 76/2008

Table 14. Developments in milk yields per cow p.a. Romania and EU in a few selected years

1993 1996 1999 2002 2005 2006
Romania litres per cow (cow and buffalo milk) 3018 2990 3133 3510 3600
EU 15 litres per cow 5442 5800
Romania as percentage of EU average 55% 52%
Source: EUROSTAT

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Table 15. Table Cows milk collected and products obtained in 2006 in EU member states

Country Cows milk
collected
Drinking
milk
Cream for
direct
consum.
Skimmed
milk
powder
Butter Cheese
1000 ton
Belgium(BE) 2.879 634 136 77 101 68
Bulgaria (BG) 758 53 2 2 73
Czech Republic (CZ) 2.454 619 43 23 37 113
Denmark (DK) 4.515 486 68 19 36 346
Germany (DE) 27.307 5.925 562 232 445 2.017
Estonia (EE) 594 83 31 9 8 31
Ireland (IE) 5.241 544 11 83 143 140
Greece (EL) 648 383 7 1 12
Spain (ES) 5.717 3.519 115 1 38 128
France (FR) 22.914 3.844 405 253 417 1.725
Italy (IT) 10.090 2.920 126 116 1.043
Cyprus (CY) 144 81 4 0 0 2
Latvia (LV) 631 95 30 0 6 29
Lithuania (LT) 1.350 81 46 0 14 91
Luxembourg (LU) 259 0 0 0 0 0
Hungary (HU) 1.440 526 7 0 8 72
Malta (MT) 41 28 0 0 0 0
Netherlands (NL) 10..738 0 0 0 128 730
Austria (AT) 2.661 813 83 4 34 152
Poland (PL) 8.734 1.335 232 120 161 607
Portugal (PT) 1.836 919 17 0 28 57
Romania (RO) 1.144 184 46 5 8 62
Slovenia (SI) 530 165 15 0 3 19
Slovakia (SK) 964 249 35 8 10 40
Finland (FI) 2.293 735 53 15 56 102
Sweden (SE) 2.986 926 94 16 27 109
United Kingdom
(UK)
13.647 6.793 289 0 121 374
TOTAL 132.513 28.000 2.400 1.830 7.800
Source: EUROSTAT, Agricultural statistics Main results 2006-2007

Table 16. Milk prices paid to farmers between 2000 2007

2000 2001 2002 2003 2004 2005 2006 2007
Consumer price indices total milk
(previous year=100)
100 137.10 117.9 118.2 113.3 108.0 104.27 111.94
Average purchasing price for cow
milk (Ron/MU)
0.28 0.39 0.46 0.56 0.62 0.64 0.67 0.75
Source: Romanian Statistical Yearbook


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Table 17. EU and Romanian milk producer prices, Euro per 100kg. 1999-2007

1999 2000 2001 2002 2003 2004 2005 2006 2007
Average
1999-2007
Hameenlinnan O. 33.94 34.27 35.62 36.20 36.03 36.07 34.95 36.03 37.61 35.63
Aria Foods DK 31.80 32.27 33.05 33.08 32.09 30.13 29.39 28.80 31.70 31.37
Danone 31.05 31.82 33.00 32.00 31.57 30.66 30.07 29.51 31.82 31.28
Friesland Foods 30.64 31.94 34.03 32.10 30.80 30.03 29.25 28.73 33.61 31.24
Campina 30.90 30.94 33.39 33.00 30.76 29.96 29.52 28.56 33.16 31.13
Lactalis 31.02 31.75 33.08 31.87 31.61 30.70 29.77 28.70 30.48 31.00
Bongrain 30.95 31.71 32.90 31.79 31.38 30.46 29.72 28.81 30.68 30.93
Vlilcobel 28.82 32.05 32.91 30.29 30.30 30.73 29.18 28.33 35.37 30.89
Sodiaal 30.55 32.07 33.19 31.71 31.12 29.97 29.11 27.86 29.91 30.61
Humana 29.49 30.76 33.42 31.35 29.87 29.08 27.99 27.76 33.54 30.36
Glanbia 30.32 30.89 31.77 29.40 28.89 28.88 28.34 27.70 34.13 30.04
Mordmilch 29.00 30.19 33.09 28.99 27.67 27.98 27.61 27.15 32.15 29.31
Kerry 28.74 29.44 30.49 28.58 28.11 27.75 27.15 26.14 32.70 28.79
Dairy Crest 28.13 27.13 30.66 28.22 26.48 27.53 27.32 27.97 29.70 28.13
First Milk 25.93 25.95 29.39 25.80 24.77 25.52 25.39 24.40 27.34 26.05
Average 30.09 30.88 32.67 30.96 30.10 29.70 28.98 28.43 32.26 30.45
Source: International Milkprice Reviews, Annual Report 2007 (www.milkprices.nl)




Table 18. Retail prices of dairy products in a supermarket in Northern Romania,
in September 2008
Milk Sour
cream
Butter Yoghurt Cheese
Measurement units Litre
3,5% fat
500 gr
12% fat
200 gr,
65% fat
125 gr. kg
Foreign brands (imported or
Romanian produced) - Ron
3,86 3,93 4,29 0,82 25,99
Products of Romanian
private dairy company (one
of top 5 or recognized
brands) - Ron
3,61 4,47 4,19 0,89 27,62
Products of Romanian
private company (new or
not famous brand) - Ron
3,14 4,89 2,46 0,97 13,15
Source: Personal observation



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References
1) Agricultural Policies in Non-OECD Countries Monitoring and Evaluation 2007, OECD 2007

2) Davidovici I., Gavrilescu D., Optiuni de politici agricole si de dezvoltare rurala n
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2008; Agrara

3) EUROSTAT Agricultural Statistics. Main Results 2006-2007
(http://epp.eurostat.ec.europa.eu)

4) EUROSTAT, Food: From Farm to Fork, Pocketbooks statistics, 2008 Edition

5) Rohner-Thielen E., From grass to glass, a look at the dairy chain, EUROSTAT
Statistics in focus 76/2008;

6) International Milkprice Reviews, Annual Report 2007 (www.milkprices.nl)

7) Ministerul Agriculturii si Dezvoltarii Rurale (The Ministry of Agriculture and Rural
Development) (www.mapam.ro);

8) National Strategy Plan for Rural Development 2007 2013;

9) Romanian Statistical Yearbook 2003-2007 (www.insse.ro);

10) Twinning RO2000/IB/AG/01-02 Agricultural and Rural Policy at National and
Regional Level, Activity 2.1.1: DAIRY Sector February 2002 (Romanian Report)