One sided co-operation in the dairy sector

An international conference has been organised by the ministry of agriculture and rural development about the dairy sector. According to László Vajda László, head of department from the ministry of agriculture and rural development, major changes have taken place in the way agriculture is subsidised and adapting to these changes offers the possibility of future stability for farmers. The dairy sector is an area where dialogue and co-operation between farmers and the processing industry is essential. It was pointed out by Barnabás Forgács, under secretary from the ministry that food has become a strategic commodity. This is why rural development and the modernisation of food production is given special emphasis in the New Hungary project. Ferenc Besenyei, president of Pannontej Zrt., and vice president of the Dairy Product Council spoke about their own initiatives aimed at generating growth. Milk producers have already established five co-operatives for selling which account for a half of total Hungarian milk production. No similar co-operation exists between milk processing enterprises. The government is expected to catalyse the process of promoting domestic products. Milk production has been in decline since our accession to the EU. While export consists of unprocessed milk, the majority of imported products are processed. It would be desirable to reach the average per capita milk consumption of the EU (200 litres). The market share of lower quality, cheaper products has been increasing in recent years. It is an important objective for the Dairy Product Council to boost domestic production. In EU countries, domestically produced milk accounts for 80 per cent of total consumption on average. It is good news that 19 Hungarian processing enterprises have been found suitable for exporting to Russia. The Hungarian dairy industry is to conduct a three year, joint promotional campaign in Russia and the Ukraine with the Dairy Association of Cyprus. The idea of establishing a collective purchasing organisation for the dairy sector has come up as a means of reducing costs. Monitoring of products on the shelves is also a priority for the dairy Product Council. 336 samples were tested last year, in six categories. A code of ethics is intended to improve the relationship between retailers and dairy enterprises. According to Tamás Éder, a member of the board of directors from SOLE-MIZO Zrt., the main problem with the relationship between farmers and processing enterprises is that they do not realise their basic interests are the same. Jan van Roekel, a member of the board from IAMA, spoke about the necessity of change in terminology. Vertical and horizontal co-operation will no longer be adequate expressions. These will need to be replaced by the concept of the value chain which includes retailers and consumers as well. He also pointed out that consumers increasingly prefer domestically produced goods everywhere.