The revenues posted by the Romanian milling and bakery industry amounted to 50,000 billion ROL (1.3 billion euros) last year, up more than 80% from the previous year, when they had been worth 718 million euros.
The industry was affected last year by wheat loans from the State Reserve and especially by the massive and very expensive wheat imports, which in fact were behind the extraordinary growth of this segment. The small players had a hard time dealing with all these problems, triggered by disastrous wheat crops, which eventually turned them into easy prey for the big companies looking for takeovers. This was the case of Gorjpan Targu Jiu and Pangran Iasi, which were bought by Vel Pitar, and of Panmed Medias, which was taken over by Boromir.
According to data released by Rompan, the Romanian patronage of the milling, bakery and pasta industry, some 5,000 companies operated in this segment last year, but 80 units jointly accounted for more than half of Romania's needs. The industry is highly fragmented, especially at the local level, where each county generally has one-three big producers that account for some 30-40% of the market and several hundred small producers, which cover the remaining market opportunities.
The double revenues were joined, however, by declining and even disappearing profit for most of the companies in this field. Aurel Popescu, chairman of Rompan, claims the profitability margin dropped to 3%.
"The losses incurred by the milling and bakery industry, generated solely by loans from the State Reserve, revolved around 35 million dollars last year, as the wheat was borrowed for 110 US dollars/tonne and given back at 210 USD/tonne," Popescu said.
And since the wheat crops were very meagre, the companies borrowed 340,000 tonnes of wheat from the State Reserve last year.
Mircea Ureche, one of the shareholders of the Sibiu-based Boromir Group (a milling and bakery company that posted 50m-euro turnover last year, up from 30 million euros in 2002) says the companies turned to the State Reserve because they had no alternative.
"The price gap for the wheat borrowed from the State Reserve brought a huge loss to the industry and especially to the millers," Ureche says. The Boromir official claims the company lost 3 million dollars only from these loans last year. Milling and bakery companies borrowed the wheat not knowing that the crops would shrink or that world prices would double.
Otilia Stanciu, marketing manager at Dobrogea SA Constanta, another big player in the industry, also says that the wheat loans from the Reserve have badly hurt the profitability of milling and bakery companies. "Because of these loans, we failed to log the scheduled profit, whereas investments also dropped," Stanciu claims.
However, most of the wheat was imported. Ever since the onset of the wheat crisis last fall, more than 1.6 million tones of wheat have been imported, with the prices having surged to 220 USD/tonne, double last summer's levels.
stelian.negrea@zf.ro
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