site.btaOilseed Oil Producers Association Call on Government to Stop Yielding to Grain Growers' Pressure, Warn of Impending Closure of Plants

The Oilseed Oil Producers Association in Bulgaria Monday urged the government to stop yielding to the pressure of grain farmers because it may bring a respite to the threats for protest but it won't provide a long-term solution to the problems caused by the low competitiveness of local growers. "Bulgarian agriculture needs solutions that will help raise the competitiveness and not ones that aim to make up for the lack of competitiveness. Without long-term solutions, the pressure and protests of farm producers result in piecemeal solutions whose effect lasts several months and then the same situation is repeated," the Association said in an official position they put out Monday. It warns of impending closure of vegetable oil plants.

The statement said: "There must be some reasonable limit to the government's willingness to meet all their [grain farmers'] demands. "Using the restrictions on imports from Ukraine as an attempt to quell farmers' demands is not a solution to their problems. The high cost of Bulgarian agricultural production in the current campaign due to high production costs and low yields have led to non-competitiveness with producers in Russia and Ukraine, and low prices on foreign markets, which is currently the main problem of Bulgarian agricultural production. The demands set out in the National Association of Grain Producers' declaration of January 13, 2024 and a subsequent meeting in the Council of Ministers [on January 22] may produce some kind of compromise but it won't solve this major problem, which tends to become cyclical."

The vegetable oil producers don't understand why grain producers always include a ban of Ukrainian imports in their demands. "The ten-month ban on sunflower imports into the country has led to a delay in the sale of sunflower produced by Bulgarian farmers: due to low prices on international markets and because the expectations for rising domestic prices did not materialize. What really happened was that prices came down after the ban was introduced, in line with the trend on international market, and because the produce stayed too long in the silos in anticipation of the higher prices, its quality worsened due to inadequate storage conditions."

Another effect of the ban on Ukrainian import was shortage of a raw material for local processors which forced a number of plants to stop operation. Many millions of investment in processing capacity in Bulgarian plants are now idle, and these can process more than 10,000 t of sunflower a day. For that reason, to say that 1,000 t of sunflower imports a day is a huge' quantity, is totally unfounded, the position says.

Vegetable oil producers argue that Bulgaria's solidarity with the demands of Poland, Hungary, Slovakia and Romania for restrictions on Ukrainian import is odd because Bulgaria does not share a land border with Ukraine, which is why the transit of Ukrainian goods is negligible (unless these are goods for processing and re-export). Also, these four countries don't have the capacity for processing sunflower that Bulgaria has.

They say that the Agriculture Ministry have worked consistently against the interests of Bulgarian processors. "Probably the constant economic and lobbyist pressure from farmers does not allow the government to take decisions which are fair for all sectors that rely on agricultural raw materials and this is how it supports a policy of slow strangulation of one of the large and most successful processing industries [of vegetable oil production] where Bulgaria is one of the world leaders."

The position says further that following the lifting on December 1, 2023, of the unofficial ban on imports from Ukraine imposed by the government as a result of the farmers' protests and the memorandum signed with them in September, imports from Ukraine were expected to be liberalized from early December - which was officially confirmed by the Prime Minister and other government officials. "All this remained just words in the wind. To date, two months later, there has not been a single approved import licence from Ukraine, despite the absence of any bans. As a result, numerous Ukrainian exporters have invoked a force majeure caused by the Bulgarian State and cancelled their contracts for the supply of sunflower and rapeseed destined for the Bulgarian processing industry," the Association said.

Closure of processing plants imminent

The Association warns that closure of vegetable processing plants is imminent due to the lack of raw materials from imports and the plans of local producers not to sell and wait for the next market campaign. "That will lead to layoffs and effective strike actions across the sector and other sectors depending on it."

They say that they shared their position with the government on January 19, 2024 and offered to work with them to solve the problems. "To this moment, a week later, there has been no response from the government. It is high time it took responsibility for its actions and inactions," says the statement.