Business Czech dairy farmers seek to take greater control over their fates
Czech dairy farmers have little reason to be cheerful. Latest European Union figures show they are being paid the lowest prices for their raw product across the 28 EU member countries. The average Czech price to producers in December came to euros 26.40/100 kg compared with the EU average of euro 32.03/100 kg. Czech farmers argue though that their production costs are not much below those applying across the rest of the continent.
Farmers have cast around in the past for causes of their woes. Big retailers were the target in the recent past on the grounds that they were abusing their market dominance to push prices down to levels where farmers could hardly break even. New competition rules for the retail sector framed to ostensibly deal with such abuse were pushed through.
But the retailers were clearly not the whole story. Now, dairy farmers are looking further up the chain and have hit on the idea of setting up their own dairy so that they have more of a stake in the process and can claim a greater share of the profits. Milk is usually being sold by Czech retailers to the public for at least twice the price that farmers are now being paid for it.
The plans are still in the early stages and remain vague. The size and site of the dairy have not been decided. Whether the dairy farm will be created from scratch or be bought up from an existing operator is also in the air. But the desire of the Czech Farmers’ Association is to have something in place by 2020.
To help cover the costs, the association is reportedly mulling whether to bring in an outside, perhaps foreign, investor but it would prefer to maintain a majority and control over the management.
The idea is being enthusiastically backed by the Minister of Agriculture, Marian Jurečka, who has offered to help the association negotiate loans with banks or offer guarantees to cover the borrowing needs. Jurečka points out that Czech dairy farmers are currently poorly placed compared with their counterparts in Germany or the Netherlands, where most of the farmers also own their own dairies or are part of collectives that do.
There are around 40 dairies in the Czech Republic. The biggest are part of the Madeta group, which has for 110 years dominated the Czech milk and dairy products market. Around a quarter of its final production is destined for export, often to the Middle East. The Tatra and Olma Olomouc dairies are also major concerns and belong to the agro-chemical empire of finance minister and ANO leader Andrej Babiš.