Bankruptcy looms for dairy farms in North Macedonia amid soaring inflation

By Gjorgi Licovski

Skopje, Oct 27 (EFE).- Soaring inflation and rising global prices are putting dairy farmers and retailers in North Macedonia at risk of going out of business, a crisis that is also being felt by the Balkan country’s poorest and most vulnerable.

“There is a milk crisis. Everything is more expensive and this reflects on the people with low income,” says pensioner Ljupcho Bajdeski, who does his shopping at North Macedonia’s largest farmer’s market in Skopje.

“If they were buying two kilos, they would get only one now. The price of cheese also increased by almost 30%, so people are buying fewer dairy products,” he adds.

The price of one liter of milk has risen from around 57 denari ($0.92) to approximately 80 denari, which many senior citizens living on pensions struggle to afford.

In a country where the average wage is around 514 euros ($512), many will struggle to afford milk sold at nearly 1.50 euros per liter.

Zora Petreska, who runs a small stand at the market selling dairy products, says the situation is at its worst since she started in the business 20 years ago.

“It has never been like this. Consumption is really low. It’s really hard for me to get the dairy products. Lots of producers have quit and closed their businesses,” she says.

“The situation is quite difficult. The government is not taking any action and we suffer a lot. I really can’t see the end of this, but eventually we will close too with the way things are going.”

PRICES RISE, PRODUCTION FALLS

Erdzelija farm in Sveti Nikole outside the capital Skopje is one of many suffering from the current global price surge, which the International Monetary Fund says has been exacerbated by Russia’s invasion of Ukraine.

Only five years ago, the dairy produced between four and five tons of milk each day, but that rate has plummeted to just 450 to 500 liters.

“Our farm produced 900,000 liters of milk in 2017, and for this year we expect to produce just 180,000 liters,” says manager and agronomist Aneta Jordanova.

The drop off has forced the farm to let go of up to 70% of their workforce, she explains.

The owner and director of the farm, Nikola Petkovski, says the shortage of trained farmhands is particularly damaging to smaller operations like Erdzelija that are not modernized or state-of-the-art, and the situation is exacerbated by rising prices of fertilizer and fodder, meaning that keeping cows is increasingly difficult and expensive.

To make matters worse, companies buy 4% fat milk from dairy farms at 0.45 euros per liter, but that liter of pasteurized milk goes for about 1.5 euros at retail, one of the highest prices in the Balkan region. The low purchasing price of milk is threatening to push dairy farmers to the brink of bankruptcy, Petkovski warns.

“If the milk companies continue to offer such low purchase prices, while selling the same milk four times higher in retail, we will not stand a chance to keep up, and the number of cows will keep dropping until the farm eventually closes.

“This is not only our case, but it’s a problem for all the farms in North Macedonia,” says Petkovski.

The situation is made worse by quality issues with the production of fodder.

In its best days, Erdzelija procured around 80% of the food for its own cows, Jordanova says. The food produced on the farm was of the highest quality and the dairy cows would each produce up to 27 liters of milk per day.