Overrated dinar shutting down milk production in Serbia

The current retail price of a litre of milk ranges from 140 and 160 dinars, while the farmers’ price of milk is around 70 dinars and both the shoppers and the farmers are rightly dissatisfied.

70 dinars, which is how much big dairies pay for farmers’ milk, is not enough to cover the basic costs of keeping dairy cows. Dairies, on the other hand, also claim that they have never earned less from producing dairy products, while shops are objecting to the high prices of milk that dairies charge – 125 dinars per litre plus VAT.

While there is a price ‘war’ going on between farmers, dairies and shops, milk consumption has been declining for years – last year it was only 182 litres per capita, which includes the consumption of dairy products. Obviously, milk and dairy products have become too expensive for the consumer. In addition, there are fewer and fewer farmers engaged in keeping dairy cows.

Last year, milk production in Serbia decreased by around 100 million litres and averages around 1.5 billion litres annually.

In 2021, the export of cheese was also in decline, as we exported half as much cheese as the year before. Our main export countries are Russia, North Macedonia and Montenegro. On the other hand, Serbia spent about 55 million dollars on importing cheese, mostly from Hungary, Germany, Austria, Poland, Italy and Croatia.

In the last decade, there has also been a noticeable decrease in livestock – from 740,000 to approximately 400,000 dairy cows. Also, instead of the former 2,800, today the average dairy farm in Serbia produces close to 5,500 litres of milk. In comparison, European dairy farms produce around 7,000 litres of milk annually.

Economists say that the unrealistic dinar/euro exchange also adversely affects dairy farms. For almost five years now, the dinar/euro exchange has been around 117 dinars for 1 euro. As the exchange rate of the dinar against the euro did not follow inflation, the purchasing power was practically halved which affected the dairy industry too. If the living standard is low in Serbia, people mostly consume milk and cheaper dairy products. The more expensive dairy products are exported to financially stronger markets, where profits are also higher.

As for state incentives for dairy farmers, the Serbian government has promised that it would increase the subsidy from 10 to 15 dinars per litre, as well as increase the subsidies for each newly registered dairy cow.

(021.rs, 13.02.2023)


This post is also available in: Italiano

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