Kuskunović: With the closure of Meggle in Croatia, most of the 340 dairy farms will disappear

The announcement by the German company Meggle that it is shutting down its production in Croatia seems to have surprised everyone in the country, and the fact that everyone is surprised and puzzled by this business decision is merely proof that Croatia does not control the agricultural sector and leaves milk production to chance as it rapidly approaches its bottom and end. A state that has fallen from about 50,000 cooperatives to around 4,500 milk producers in the last 20 years, while reducing production to about 40 percent self-sufficiency, clearly has no plan on how to preserve, increase, and maintain this production profitably. 

The decline in milk production in Croatia has lasted for over 13 years, and attempts by small producers to unite and create mini dairies have failed (there are a few rare positive cases that are draining into import competition) and during this period, no strategic way has been found to preserve production.

The EU has milk surpluses, which have increased because production quotas have been abolished, and the corona crisis has created huge stocks and market surpluses. Meggle has clearly assessed that production in Croatia is no longer profitable for them as it is cheaper to import their brands from the open EU market and produce them in less expensive countries in the region where farmers are still engaged in milk production because the state takes care of them.

With the closure of this factory most of the 340 dairy farms with a total production of about 26 million kilograms of milk will disappear, which is about 6 percent of the total amount of milk delivered annually to Croatian dairies. Few will find new dairies for which they will produce milk, and some will be happy to stop doing this job that is done 365 days a year and is laborious. What is alarming is that despite all state institutions – HGK, HUP, the Ministry of Agriculture, Advisory Services, and various administrative wonders, the state has no idea that such a process is happening in the third-largest dairy and that such a producer intends to shut down production.

Now everyone is rising to their feet and claiming they will find a solution. However, there is no solution and there will not be one until Croatia finally starts talking about production and export, rather than the distribution of money for agriculture. In Croatia apart from crop farming, most production is failing, but this is silenced and not discussed realistically. This approach will lead to the day when we will be surprised if Lactalis leaves Dukat. Croatian dairy farming has been seeking a solution for years, and the open market contradicts us and confirms that something in agricultural policies has not been right for years. Therefore, we should stop talking about subsidies and start discussing production and why we have less and less of it.

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