ZAGREB, (Hina) – Croatia’s dairy industry is facing extremely strong import pressures, particularly from Hungary, while costs in the sector are rising faster than revenues, according to the Croatian Employers’ Association (HUP) publication Focus of the Week, released on Friday.
Low self-sufficiency and structural market weaknesses are limiting the long-term development of the sector.
“The Croatian dairy industry finds itself in a paradoxical position: domestic milk is expected to be on the shelves every day, yet it is increasingly difficult to maintain domestic production. Despite tradition and potential, self-sufficiency in milk stands at around 40% when measured by collection relative to total annual domestic consumption, meaning the majority of consumption is met through imports. This raises questions about future food security as well as the sustainability of business models for producers and processing companies, who are exposed to strong international competition while facing price limitations and higher tax burdens on the domestic market,” HUP notes.
Over the past ten years, the purchase price of milk in Croatia has been around 3% lower than the EU average, while retail prices for dairy products in stores are about 8% lower than the EU average.
In practice, this means that the pressure falls almost exclusively on domestic producers and dairies, while consumers enjoy lower prices in the short term but risk losing local production in the long term.
A particularly sensitive area is the increasingly intensive import of cheaper products, especially from Hungary, which runs a surplus in milk production, HUP notes.
In such an environment, domestic dairy farms struggle to build added value and investment cycles that would enable higher purchase prices and more stable operations, HUP adds.
It also notes that the VAT system is burdened by a clear imbalance, which further reduces the sector’s competitiveness raw milk is taxed at a rate of 5%, while cheeses and fermented products are taxed at 25%. This increases the cost of the most valuable stage of processing and encourages the import of finished products.
Sector needs a coherent policy that addresses unfair competition and dumping imports
Employers point to the long-term decline in the number of primary producers and the low level of investment in modernisation, which reduces the sector’s productivity and resilience.
They therefore believe that the sector needs a coherent policy that addresses unfair competition and dumping imports, rationalises VAT along the value chain, and ensures stable and predictable development incentives.
They stress that it is urgently necessary to lift the price caps on milk and dairy products, ensure a level playing field in the market and prevent dumping import prices, halt the closure of primary producers and preserve a sustainable value chain, and provide a predictable regulatory framework without ad hoc price interventions.
