• Aurel Popescu, president of the Romanian Employers' Association of the Milling, Bakery and Flour Products Industry (BROKEN), gave an exclusive interview to the Arta Albă editorial office regarding the problems faced by the sector it represents.
1. The year 2022 was a year full of events that put the world economy under particular pressure. The start of 2023 does not look more balanced. How has the sector you represent been affected?
The year 2022 was a very bad year for the milling and baking sector. Our sector recorded the highest cost increases since the beginning of the year because, in addition to the influence of energy expenses, we had the influence of the increase, in fact of the doubling of prices for the raw material, namely for wheat.
2. Recently, we have witnessed timid attempts at support from the state, which extended from the population to companies. Do you think enough has been done to counter the difficult economic situation?
Yes, it is true that the state, for the first time, took special care of the food industry as well. When capping energy and gas prices, the food industry was passed over as an extremely important branch from the start.
Then, Ministry of European Funds allocated, through various programs, money for retrofitting and investments in green energy, and even tried, for the first time, to subsidize the particularly serious influences of the war in Ukraine, in the sense of paying a subsidy for wheat purchased from agricultural producers during August 15 – November 30.
Of course, these measures did not manage to completely counteract the negative influences we had. Especially the colleagues in the bakery could not increase the prices to the level of the production costs, because there is no coverage in the population to pay these high prices.
It is true that, lately, there has been a reduction in costs, especially with the raw material, and many people ask themselves the question when the price of bread will drop to the previous level, but no one takes into account the losses we have recorded when we could not raise prices to the level of production costs.
Especially in our milling-bakery field, the market economy works with its clear rules: only when each economic agent calculates that they are no longer making losses, can they afford to reduce the prices of milling-bakery products. We are still waiting that Ministry of Agriculture and the Agriculture Commission of the Chamber of Deputies to extend the effects of GEO 154/2022, at least until June 30
3. The market price of wheat is experiencing unprecedented turbulence. How does this affect your sector and, last but not least, the end consumer? Should we expect further price increases for bread and bakery products?
Yes, it is true that the price of wheat has seen some unprecedented swings, this is due to the war in Ukraine and the fact that Ukraine, which is not an EU member state, was allowed to sell grain and processed grain products, especially flour, on the market of the states EU members, no customs duties. The states most affected by this permission were Romania and Poland. In Romania, large quantities of flour were brought, which, in many cases, did not have the appropriate baking properties, but at prices at the level of the price of wheat, and this upset the market, not to mention the tax evasion registered.
4. Romania's population, in steady decline, has reached the level of 1966, but as the figures for the last five years showed, it is still a large consumer of bread. Do you think this trend will continue?
Romania has recorded, at least in the last 10 years, a constant decrease in bread consumption, both in total quantity and per person/year. This downward trend in consumption will also be influenced by the price of bread in the coming period.
5. The global deficit of the trade balance with agri-food products is constantly growing – 1,22 billion euros in 2019, 2 billion in 2020, 3,4 billion in 2021 and probably we have reached 4 billion in 2022. We continue to export massively raw material and we import processed food with high added value. The same is happening in the field in which we operate: frozen products, biscuits and other bakery products are still imported.
It is clear that there are still opportunities to invest in this area. Shouldn't the government, under your guidance, allocate grant funds for this area of investment, guide potential investors in the direction that could help reduce the trade deficit?
The deficit in the trade balance with milling-bakery products is largely due to the fact that, on external markets, we and the other European states meet countries that are not EU members (Russia, Turkey and more recently, very virulently – Ukraine), countries that, due to the fact that they have no constraints, can afford to give subsidies so that they always come with 20-25 euros per ton of product, lower prices than our offer.
This is where the trade balance deficit comes from, and I believe that if this permissiveness for Ukraine continues, if the Romanian state does not compensate for the losses that Romanian economic agents are recording, they will go bankrupt.
Recently, we worked together with the Ministry of Agriculture on a material through which we proposed to the Prime Minister measures to counteract these negative effects. But, if we talk about foreign trade, we must appreciate the fact that Romania will always be an exporter of raw materials, because it produces three times more than it consumes, but also of finished products, as is the case with the volume of export sales of cozonacs, which reached the beautiful figure of 2 million pieces per year.
6. The milling and baking sector leads the top of the food industry, with around 59.000 employees (according to 2021 data). But the owners of the 7.100 large or small companies in this sector still complain about the lack of labor. How do you see the future of jobs in the field and what can be done to solve this situation?
It is true that we, the milling-bakery sector, have almost as many employees as the rest of the sub-branches of the food industry, but the number of companies is just as large.
Labor turnover is quite high. It has recently been reduced by increasing the minimum wage in the food industry to the level of 3000 lei, with facilities similar to those offered in construction, and through this measure the labor force has been stabilized.
Jobs in the field have kind of disappeared lately, due to the abolition of vocational schools, but also the fact that the incomes, until the measure to change the minimum wage and the reduction of contributions in the food sector, were not attractive.
I think that in the future we can develop the area of on-the-job learning, qualification through the assessment system and even shorter qualification courses, but the most important thing is to increase the period of practice, because that's where you learn the trade .
7. The group Vel Pitar was bought by one of the most important global companies in the bakery field, Bimbo. The Bimbo Group had a turnover of 2021 billion euros in 17. Romania's turnover in this segment is about 2,4 billion and it has doubled compared to 2009.
Probably, other companies in the field will pass, sooner or later, in the portfolio of this colossus. How do you think this transaction will impact the milling and baking sector?
The Vel Pitar Group will continue to exist and probably grow, being now under the umbrella of the group Bimbo. Other foreign and Romanian investors have appeared and are increasing their investments, and this is a good thing because we are witnessing an increase in competition, and the population has nothing but to gain, both in terms of price and product quality.
8. The Easter holiday is approaching and we know how much Romanians love cozonacul.
What can you tell us about their price? Will it be able to find itself on the tables of the majority of the population or not?
We are definitely preparing to produce for the Easter holidays and, as we said before, to deliver more and more quantities outside the country, for Romanians abroad. As for the price of the cakes, each manufacturer makes their calculations according to the production costs they have.
9. To finish on a positive note... In Poland, every year before entering the Easter Lent, Maundy Thursday is celebrated, a day on which Poles consume about 100 million doughnuts. We must not forget that we also have our famous Romanian doughnuts, "the lies", appreciated primarily by the political class.
In your opinion, which Romanian bakery product could be the object of such a celebration?
Regarding the "Fat Thursday" celebration, which is practiced in Poland, we don't think we will go eat doughnuts, because we have "swallowed" enough, but we have enough traditional Romanian products that we can promote and develop.
Interview conducted by Gabriela Dan, Editor of Arta Albă
Read on White Art and: Picarones – the unique Peruvian doughnuts
