Dairy farmers are facing a tough market as they struggle to find buyers for their milk, the primary raw material, with prices plummeting by 25% within a year.
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Dairy processing factories claim that even after the price drop, milk from Albanian farmers remains among the most expensive in Europe, as subsidies provided by European states to foreign farmers help reduce costs.
Middle-sized farm managers state that they are not selling milk to processing factories due to disagreement over pricing. Imports of milk for the period January-March increased by approximately 33% compared to the previous year, according to Customs data. The quantity of imported milk for January-March reached 4.6 million liters, the highest since 2016, Monitor reports.
The decrease in milk sales price
Ervin Resuli, manager of a medium-sized farm in Fier, asserts that currently, milk produced by large and medium-sized farms is not being purchased by processing factories due to pricing conflicts. The only ones selling milk at a price of 60 lekë, below the production cost, are small farms.
Resuli stated that the situation arose following a drastic drop in the selling price, risking the bankruptcy of farms. According to him, since April 2023, when milk was traded at a price of 80 lekë without VAT, until now, the selling price has dropped by 20 lekë per liter.
Within a year, the selling price of cow's milk for farmers has dropped by 25%, from 80 lekë without VAT in April of last year to the current demand of 60 lekë without VAT. Over the course of a year, the milk selling price has dropped several times by 2 to 3 lekë. The latest drop was recorded on April 1, 2024, with an additional 10 lekë reduction. The selling price of milk went from 70 lekë without VAT to 60 lekë without VAT.
The decrease in the selling price forced breeders to protest for the second time to defend their production, demanding more subsidies from the Albanian state. This is the second protest held within a few months, where farmers poured their produce onto the streets, with another protest held by farmers in February.
The decrease in the selling price of milk began in December 2023. Taulant Pupa, the administrator of the "Vita 2001" milk processing factory, previously stated to Monitor that the drop in the purchase price of milk from farmers started due to lack of sales.
According to him, the prices of cow's milk in December fell to 5 lekë per liter, reaching 65 lekë without VAT. Furthermore, some factories, according to him, are buying milk from farmers at 50 lekë per liter without VAT.
Luis Ndreka from the company "Lufra" claims that the price of milk as a raw material has been the highest in Europe and perhaps in the world until the end of 2023. According to him, the price still remains high compared to European countries, even with the recent drop on April 1, 2024, due to subsidies given to foreign farmers, ensuring a cost reduction.
The decrease in the selling price of milk used as a raw material for dairy product production, according to him, has been influenced by the decrease in the consumption of ready-made products.
"After the Russia-Ukraine war in 2022, the costs of feeding animals increased, resulting in a reduction in herds and a decrease in the number of milk-producing farms. The increase in production costs was accompanied by a rise in the selling price of milk. Throughout 2022, the price of cow's milk ranged from 58 lekë to 73-74 lekë without VAT per liter by the end of the year.
The price increase sparked a lot of interest in cattle farming and herd expansion. In 2023, there was a slight decline in price, ranging from 68-70 lekë per liter. But again, the price was quite high compared to European countries, which prompted an increase in herd numbers in stables and consequently the amount of milk produced.
In these conditions, when the quantity is high and the price continues to be high, but the demand for these products on shelves does not recover at the same levels, naturally, this has led to a reduction in the price of milk to 64-66 lekë today", he claims.
Imports increase by 33% for the months of January-March
According to Customs data, for the period January-March, 4.6 million liters of milk were imported, the highest quantity since 2016. Imports for the period, compared to the previous year, increased by about 33%.
Processors emphasize that they continue to focus on supplying raw materials for production to local farmers, but according to them, compared to abroad, milk prices as raw materials are cheaper.
"The price of milk from import farms is cheaper. Last week, it reached a minimum of 38 cents at the farm gate in Hungary. Along with transportation (which adds about 20% to the cost) and the 10% protective tax on domestic production, it comes here to collection points at a cost of around 59-61 lekë without VAT, again cheaper than the price offered to local farmers. Farms in EU states, such as Hungary and other countries, have been heavily supported by policies and subsidies and continue to be subsidized, which significantly reduces production costs", claims Mr. Ndreka.
According to Customs data, for the months of January-March, 126.9 thousand kilograms of powdered milk were imported. Compared to January-March 2023, the imported quantity decreased by 54%.