1. Transition model for Dairy Development in the Romanian Dairy Cluster March 17 th 2014 Wim Zaalmink, LEI Wageningen UR wim.zaalmink@wur.nl

2. The Romanian Dairy sector – a transition model GOALS:  To improve the competitiveness and sustainability of the Romanian small & medium scale dairy farming  Aim is “ to produce a quantity of 2.5 million tonnes of raw milk“  Which steps have to be taken to contribute to a economical, ecological en social sustainable dairy sector?

3. Contents 1.Dairy chain in Romania (structure, cost price, milk production) 2.Observations and SWOT 3.Rural Development Program 4.Business model for transition model dairy chain.

4. Milkproduction, consumption and import in Romania Source: Eurostat

5. Milkproduction and milkproducers Source: APIA

6. The Romanian dairy sector - structure 200520102010 compared to 2005 (%) Ha grass and fodder crops (x 1000) 16791268- 24 Nr. of dairy cows (x 1000)16581151- 31 Nr. of farms total1,134,000625,000-45 0 – 19 cows1,132,640622,050- 45 20 – 49 cows1,4102,260+ 60 50 – 99 cows230460+ 100 > 100 cows120220+ 83 Total milkproduction (Miljard kg)-24 More recent data not available Source: Eurostat

7. Structure of larger Romanian dairy farms and development in future 200520102013 *) Nr. of farms with: 20 – 49 cows1,4102,2603000 50 – 99 cows230460750 > 100 cows120220330 Total of dairy cows (x 1000)95165230 Total milkproduction of these farms (tonnes) 4758001,150 *) estimation Source: Eurostat

8. Characteristics different groups of FADN- farms (2010) in Romania (Source: FADN) 20 mc40 mc100 mc Nr. of dairy cows2140100 Representing farms1500620240 Milk/cow (kg)350036905013 Milk/farm (tonnes)74147503 Total labour2.33.16.8 Unpaid labour (farmer, family) 1.82.01.3

9. Costs per 100 kg of milk (2010) (Source: FADN) Dc = dairy cow

10. Our observations 1. Milkquality : different insight in actual facts and figures: is there a problem in realising the EU-standards in 2014 or is there no problem? 2. Quality of (paid) labour is a problem. Less interest, not educated. 3. Financing of farms is a bottleneck. Some organisations try to solve by the construction of taking over the risk but which is very expensive for the farmer. Banks are not speaking with ‘language’ of the dairy farmer. 4. Lack of trust and financial perspectives of dairy sector and developments by banks 5. Land and title of land. Registering is needed and is in progress now. Registering is essential in case of financing by banks who have no guarantee of ownership. 6. Density of milkproduction in the country is low. High costs for collecting milk, for distributing feed, machines and equipment etc. Specialism and concentration is needed.

11. Our observations (2) 7. Knowledge. Missing link between Universities and farming practice. Lack of specialised training for lower education, experimental and demonstration farms, knowledge transfer, advice or extension opportunities. 8. Independant laboratories for milk quality, soil and roughage analysis 9. Breeders organisations are willing and doing their best but need professional support 10. No barriers in starting up a farm in the rural area. 11.There are willing farmers but it is difficult to find good advisors (doing at their own) 12.There is no culture yet for entrepreneurship – taking actions is difficult in favour of reclining and waiting 13.Lot of governmental attention to rural development but is there a focus on developing a strong agricultural sector?

12. SWOT analysis STRENGHTSWEAKNESSESS Low costs of land Low costs of labour Low cost price of milk High natural potential for milk and roughage production Small scale dairy farming Age of farmers and succession Land registration, cadastre Knowledge and skills of labour Milk quality and milk yield Knowledge system (education, extension, technical knowledge) Entrepreneurship Financing and trust OPPORTUNITIESTHREATS High natural potential for milk production Rural Development Program: -Fostering knowledge transfer -Enhancing farm competitiveness -Promoting food chain organisation Interest of foreign business partners to invest Rules and bureaucracy Cooperation mentality Standard of living in rural areas End of EU-quota system Romanian policy (most votes in rural areas)

13. How to force a change in trend? Milkproduction Imports of milk Time

14. What is needed? 1.A common Romanian vision about the future and the strategy 2.A competitive milk production chain: finding the good farmers, facilitate, training and advising 3.Starting a project with pilot farms (increasing in size and milk yield) 4.Solving the private financing problem 5.Describe and disseminate current good practices, ‘ story telling’ 6.Stimulating entrepreneurship by training 7.Support in creating a stable knowledge system 8.Involvement of Romanian institutes in international (EU)-projects (Horizon 2020)

15. Example 1: village farm in phase to grow

16. Example 2: village farmer started a new farm

17. Example 3: A large modern farm with milking robot

18. The European Rural Development Program and the Romanian implementation (under construction) List of measures that can be financed under the program, of importance for the dairy sector Priority 1: Fostering knowledge transfer and innovation in agriculture etc, Article 15 : knowledge transfer en information actions Article 36 : Cooperation Priority 2:Enhancing farm viability and competitiveness of all types of agriculture in all regions Article 18 : Investments in physical assets Article 36 : cooperation Article 20 : farm and business development Priority 3: Promoting food chain organisation, including processing and marketing of agricultural products, animal welfare and risk management Article 18 : Investments in physical assets Article 36 : cooperation Article 37 : risk management

19. Business model transition 5000 dairy farms > 20 cows 5000 dairy farms (doubling in size) Milk yield 4000 kg Milk yield 6000 kg Total milk production 1 Million tonnes Total milk production 2.5 Million tonnes

20. From 1 to 2.5 billion kg milk  Starting with farms sized > 20 cows  Facilitating these farms in doubling production capacity and productivity  Facilitate knowledge transfer  On long term education / extension / knowledge The project

21.  3 – 4 regions with each 6 – 10 pilot farms  A Dairy Information Centre (DIC) in each region  Linked to Universities The project (2)

22. ● Coordination ● Facilitation ● Communication ● Practical training ● Training on entrepreneurship ● Action research in practice, good practices ● Factsheets, articles in farmers magazines ● Field days, organizing farm visits ● International exchange  Linked to Universities The project (3) - DIC’s

23.  Milk processors  Local organisations  Suppliers of housing, equipment, feed  Breeders organisations  Government  Universities  Etc. Creating a consortium

24.  PPS: Dutch business partner, topsector AgriFood (the innovation and development part)  Local and Romanian partners, processors (perc. of milk returns?)  Support from Rural Development Program? Financial part of the project – opportunities

25. The Wageningen UR approach in general Future Present Networks of farmers, research, extension, government, business, society

26. Suggestions / questions?

27. Thank you for your time and attention! More information? www.wageningenur.nl/lei wim.zaalmink@wur.nlwww.wageningenur.nl/lei More information? www.wageningenur.nl/lei wim.zaalmink@wur.nlwww.wageningenur.nl/lei