cooperation and solutions in agriculture 2009 the hungarian milk market and the global economic...

Cooperation andCooperation and solutions in agriculturesolutions in agriculture

20092009

The Hungarian milk The Hungarian milk market and the Global market and the Global

economic crises economic crises

Hungary in Europe

General Introduction to General Introduction to the Hungarian milk marketthe Hungarian milk market

Animal Stock Animal Stock

Animal StockAnimal Stock

0

100

200

300

400

500

600

700

800

2004 2005 2006 2007 2008

SzarvasmarhaTehénTejhasznú tehén

General Introduction to the General Introduction to the Hungarian milk marketHungarian milk market


Number of SitesNumber of Sites


Year

Keeping Cattle Out of this : Keeping Cow

Number of cattle/farm

Agricultural

Company Farmer

Agricultural

CompanyFarmer

Agricultural

CompanyFarmer

2005 847 24 261 764 17 570 560 9,6

2006 906 19 170 804 14 808 531 11,5

2007 898 18 908 799 13 260 540 11,6

2008 870 18 206 780 13 433 545 12,5




Milk quotesMilk quotes

Milk quotMilk quoteses

1880,00

1900,00

1920,00

1940,00

1960,00

1980,00

2000,00

2020,00

2040,00

2060,00

2004 2005 2006 2007 2008 2009

Tejkvóta Magyarország tonna




Milk quotaMilk quota

Milk production Milk production

Milk production (million liters)Milk production (million liters)

1740

1760

1780

1800

1820

1840

1860

1880

1900

2004 2005 2006 2007 2008

tejtermelés/tehén/liter 6693

tejtermelés/tehén/liter6781




Milk quotaMilk quota

Milk productionMilk production

Raw milk buy-outRaw milk buy-out

Average prices of raw milk buy-outAverage prices of raw milk buy-out

0,00

10,00

20,00

30,00

40,00

50,00

60,00

70,00

80,00

90,00

2004 2005 2006 2007 2008 2009 1-3hó

2004

2005

2006

2007

2008

2009 1-3hó

zsír 3,63fehérje 3,23



The number of Milk ProcessorThe number of Milk Processorss in in Hungary Hungary

60

65

70

75

80

85

2004 2005 2006 2007 2008

Tejfeldolgozók számaMagyarországon

Concentration among the processors

Top 5 Top 5 in Hungary in Hungary ((net revenuesnet revenues))

Net revenues 2006 (thousand HUF)

Tolnatej 14 354 738

Bongrain 21 675 014

Danone 26 596 844

Friesland 44 199 820

Sole-Mizo 50 977 277

New participants New participants ––new rolesnew roles

Alföldi Tej Alföldi Tej enters the marketenters the market

InternationalInternational Companies Companies are overshadowed are overshadowed

Challenges that milk Challenges that milk processors are facing processors are facing

I.I. Market ChallengesMarket Challenges a)a) Decrease in DemandDecrease in Demand

the global economic crises affects Hungary more the global economic crises affects Hungary more seriously seriously

because of thebecause of the high state debthigh state debt high budget deficit high budget deficit

llaack of anti-cyclic ck of anti-cyclic economic policy economic policy

ØØ state spending state spending øø tax decreasetax decrease øø interest rate decreaseinterest rate decrease

History of Milk Product SalesHistory of Milk Product Sales (2008)(2008)

Forrás: GfK Hungária, Consumer Tracking

Challenges that milk Challenges that milk processors processors are are facfacinging

b)b) Import Import PressurePressure high import ratiohigh import ratio

unsettled European market unsettled European market InternationalInternational chains chains with Eastern and Central European markets with Eastern and Central European markets secure their home industry’s support secure their home industry’s support

Overproduction because of weakened quota regulationsOverproduction because of weakened quota regulations meetsmeets decreased demand decreased demand Low efficiency of market regulation toolsLow efficiency of market regulation tools

In some product categories 40-50%

In some product categories 40-50%

MMarket share arket share of dof domestic and importedomestic and imported milk milk (UHT)(UHT)

Weaker HUF

Collective measures in quality controlfor domestic and imported goods

Forrás: GfK Hungária, Consumer Tracking

2. wholesale

1. hypermarkets

Challenges that milk Challenges that milk processorsprocessors are are fac facinging

c) c) Strong ChainsStrong Chains

3. supermarkets9 9 94

2 2 24

15 15 14

7

15 14 14

13

3 3 3

1

17 18 18

22

15 15 17

22

24 25 23 27

2006 2007 2008 … 2013

Hypermarket

Supermarket

Wholesale

Cash&carry

Small shop chains

Independentshops

Grocery

Else

Forrás: GfK Consumer Tracking, és GfK szakértői becslés 2013.

Plus supermarkets!

Ethical CodexEthical Codex Adaptation Adaptation Concentration Concentration

- - priceprice

- - flexibility flexibility

- - supplysupply

Milk Processor Concentration Milk Processor Concentration ((revenuerevenue))

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2004 2005 2006 2007 2008

Top 3Top 5Top 10

II. II. ProblemsProblems of of FinancingFinancing

Changed bank credit Changed bank credit policypolicy

Increasing costs of Increasing costs of

interests interests On base of HUF and On base of HUF and

foreign currency as wellforeign currency as well ((companies’ losscompanies’ loss of of ~~20% 20% on on

foreign currency creditsforeign currency credits))- Hungary’s Hungary’s position position hashas

weakened internationally weakened internationally

increased financial increased financial imposition in export trade imposition in export trade

HDB’s credit guarantee program could help

HDB’s credit guarantee program could help

III. III. Problems Problems of Tenderingof Tendering

SSlowlow, , prefers producers to prefers producers to processors processors

Without competitive Without competitive FOOD FOOD INDUSTRY there is no competitive INDUSTRY there is no competitive

AGRICULTURE AGRICULTURE

High raw milk export ratioHigh raw milk export ratio

The landownership is not solved The landownership is not solved

Investment has stopped because of lInvestment has stopped because of laack of financingck of financing

This years dry weather is making producers situation This years dry weather is making producers situation even even worseworse

IV. IV. Possible damage of the Possible damage of the producers’ base due to low producers’ base due to low

priceprice

V. V. Increase in the number of Increase in the number of partners who do not pay partners who do not pay

General General lack of lack of trust trust because of because of mutualmutual debts debts

! ! LegislacyLegislacy needs to needs to be changed be changed

debt

debt

debt

V.V. Prospects in the next few Prospects in the next few years years

SWOTSWOT analysis analysisStrengths

Efficient, selected cattle

Appropriate forage base

High percentage of industrial milk

producers Improving milking

Relatively cheap labour Quick adaptation

Weaknesses

Lack of capital

Low cooperation skills

Low profitability

Many small businesses in the processing

Low rate of specialization

Low support in comparison to Western Europe

Deficient marketing

Low lobbyist skills

Deficient trade negotiation position

SWOT SWOT analysis analysis

Opportunities

Growing global market

Vantage point due to close Western and Eastern European markets

Positive changes in the consumer preferences in medium term

Expected growth in the domestic consumption

Concentration

Increased public and individual marketing

Thinking together, increasing organization and lobbying

Threats

Decreasing population Worsening solvency Currency rate fluctuation, high tax and interest ratesFinancing difficulties Increasing energy costsIncreasing environmental costs Low scale of investment and innovationLow economic growth Low utilization of capacities in processing Declining production Increasing importMilk’s weak competitive position in comparison to other drinks Concentrating retail trade

Kereskedelmi márkák térhódítása

Thank You for Your Thank You for Your AttentionAttention!!

Koller AttilaKoller AttilaChief ExecutiveChief Executive

Tolnatej Zrt.Tolnatej Zrt.

cooperation and solutions in agriculture 2009 the hungarian milk market and the global economic...

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