1. ROMANIAN DAIRY SECTOR - 2025 Heading for a prosperous future or On a dead-end street Strengthening Milk Sector /Netherlands-Romanian bilateral project INTERLACTA - Brasov 4 June 2010

3. Facts -1 Romanian dairy sector is a part of a larger European market The international dairy market is price competitive Cost price of raw milk is leading for milk processing plants Romanian dairy sector is characterised by subsistence farming (93% having < 3 cows)

4. Facts -2 Milk producers are not organised Milk processors are organised Dairy actors are struggling to survive A long term strategy and development plan for the whole dairy sector are lacking

5. Facts – Current status milk deliveries YearProducersQuotaAverage 2006243,0001,007.64.15 2008/2009179,0001,063.15.94 Reduction of 26.3 % in suppliers 5.5 % increase in total quota 43.1% increase in individual milk quota

6. Facts – Current status direct sales YearProducers QuotaAverage 2006615,0002,154.63.50 2008/2009324,0001,273.53.93 Reduction of 47.3 % in suppliers 40.9.5 % decrease in total quota 12.2% increase in individual milk quota

7. Subsistence farming Most likely the lowest cost price of raw milk Problems: Milk collection Milk quality Milk payment administration Leading to high cost for milk processor

8. Subsistence farming Lack of : Physical capacity and power (land & age) Knowledge Finance No future for development = social problem not to be solved by agricultural policy and subsidies

9. Poland - deliveries Year no producersmilk quotaav/farm 2004311,110 8.4 billion 27,016 kg 2009117,870 9.5 billion 53,284 kg 42% of the farms stopped in a 5 year period Average milk quota/farm increased by 97% !!!

10. Poland – direct sales Year no producersmilk quotaav/farm 200476,017 450.3 million 5,924 kg 200916,811 105.9 million 6,281 kg 77,9% of the farms stopped in a 5 year period Total milk quota decreased by 76.5% !!!

11. Poland – farm size Milk quota X 1’000 kg 2004 No. farms 2004 % 2010 No. farms 2010 % % change In farms no. 0-581,69526.327,10215.2- 66.8 5-1070,87022.821,33512.0- 69.1 10-2060,38319.428,13215.8- 53.4 20-5058,28418.747,11026.5- 19.1 50-10026,9518.732,38418.2+ 20.6 100-25010,9253.518,07010.2+ 65.4 250 - 5001,2830.42,7241.5+ 112.3 500-1,0003890.16270.4+ 61.2 < 1,0003300.13860.2+ 17,0 TOTAL311,110100 %177,870100 % - 42.8

12. The Dutch dairy farming sector 1998 – 2008 Item1998 2008 % change No. farms27,500 18,500 - 33 No. Cows 1.47 mil 1.38 mil - 6 No. Land 875,500 ha831.000 ha - 5 Milk quota10,2 bil kg 10,4 bil kg + 2 No people52,49335,686- 32

13. The Romanian dairy sector Projection for 2025 3.2 billion kg milk quota 7,000 kg milk/cow 412,000 milking cows 8,500 milk producers

14. The Romanian dairy sector Projection for 2025 – farm sizes 5% king size farms having >1.000 milking cows = 20.600 cows at 21 farms 10% large size farms having 500 milking cows= 41.200 cows at 83 farms 15% medium size farms with 150 milking cows= 61.800 cows at 412 farms 20 % family based farms with75 milk cows= 82.400 cows at 1,099 farms 50% family based farms with 30 milking cows = 206.000 cows at 6.867 farms

15. The Romanian dairy sector Projection for 2025 – farm sizes There is a future for approx. 8,500 dairy farms with good and sustainable income from dairy farming NOTE: Currently 515.000 entities/farms have around 1.6 million cows

16. Conclusion A reduced number of farms/cattle should lead to a spectacular reduction in cost at the private sector as well as at National/Government level. This reduction of costs should be used for stimulating the increase in farm size and production by subsidizing cost for milk control, interest on farm loans & creating a efficient extension organization.

17. Conclusion The sector should focus on: Competitive milk production (cost price) Identify the minimum economic farm size to be competitive What kind of support is required to the 5% survivors What happens if the milk quota ends in 2015 What to do if the CNDP ends by 2013 and is replaced by SAP What happens by when the EU milk quality regulation is enforced (1 st January 2012) How to support the Government in preparing effective laws and regulations (OIPA) How to reduce controls by the Veterinarians into a less costly auto control

18. Great idea But……………………….. Where to start? Who takes the initiative? Who pays?

19. Key decisions in new reality 1.Speak out that Romania will be self supporting in milk production 2.Realise that subsistence farming will lead to insufficient quality & quantity 3.Realise that farming should be commercial viable and not driven by subsidies 4.Realise that scale of economy is the drive in development of farms

20. Key decisions in new reality 5.Use agricultural state support only for improved performance and not for social support 6.Assess the demographics of current subsistence farmers and the natural decline in numbers 7.Assess the current agricultural state support and re-allocate these funds for development of commercial farms (direct & indirect) 8.Enforce tight implementation on legislation

21. Key decisions in new reality 9.Assess the capacity of APIA, ANCA, ANSVA, ANARZ, agricultural education required to support the 8,500 dairy farms 10.Realise that a sound and solid long term dairy policy is required – NOT be hampered & jeopardised by political influences and adjustment of Governments

22. I have a dream…

23. My dream

24. Let’s start! Thank you for your attention!