The current crisis will slow down, but not stop, agricultural development. This can be a good moment to return to the village, restore neglected households and engage more intensively in agricultural flows. Agriculture is a sector in which people who lose their jobs can find employment.
This is the assessment of the chairman of the Board of the Association of Agriculture and Food Industry of the Chamber of Commerce (PKCG) and the founder of the "Lazine" dairy, Milutin Đuranović.
He pointed out to "Vijesti" that one should not wait for a crisis to manifest patriotism.
"I think that regular payment of all kinds of taxes for decades, regular payment of salaries, obligations to business partners is a true measure of patriotism in good and bad times."
He assessed that the continued use of project funds from the EU and the Government are a roadmap for the long-term development of agriculture, which should be harmonized with state support for the placement of agricultural products on the domestic market.
"In addition, the role of the Investment and Development Fund is significant", added Đuranović, answering the question of what the PKCG thinks the state could do in the shortest period of time to encourage the development of agriculture, processing industry and animal husbandry.
"Every development is a process, and since the question relates to the development of agriculture and the processing industry, we can state that this is a long-term process. Agriculture is a low-accumulation activity, and the nature of capital is to 'travel' to high-accumulation activities where the degree of fertilization is higher than in agriculture, and the payback time is as short as possible. For this reason, agriculture occupies a special place in developed economies, and I estimate that it should be the same in our economy".
Will the coronavirus epidemic stop development in this area in 2020, or do you think that new entrepreneurs can seek a chance for business even in these conditions?
I think that the current crisis will slow down, but not stop, agricultural development, for the reason that it is mostly about family businesses, in which hardworking and dedicated families are involved, and which have shown a high level of endurance in the periods of all previous crises. In recent decades, the process of leaving the village has been taking place. As it is certain that the crisis will cause increased unemployment, I believe that this can be a good moment to return to the village, restore neglected households and engage more intensively in agricultural flows. Agriculture is a sector in which people who lose their jobs can find employment. I express my fear that, if there is no support for the marketing of agricultural products and their collection, potential producers may be discouraged from finding employment in agriculture, regardless of the availability of attractive project funds from the EU and the Government.
The "Buy local" campaign is particularly emphasized by the Chamber of Commerce, although no domestic food and beverage producer has reduced the price of their product by even five cents as proof of patriotism. Even the prices of many fruits and vegetables are significantly higher since March 9. Why don't dairies, for example, reach an agreement with retail chains and take that first step towards a minimal price reduction?
I believe that one should not wait for the emergence of a crisis to prove patriotism. I think that regular payment of all kinds of taxes for decades, regular payment of salaries, obligation to business partners is a true measure of patriotism, both in good and bad times. Montenegrin dairies buy about 70.000 liters daily (from Ulcinj to Rožaj and Žabljak) from about 3.000 subcontractors, whereby we regularly settle all obligations towards subcontractors, providing them with various types of assistance and thus contributing to the survival of people in the countryside, i.e. the maintenance of Montenegrin livestock. I am taking this opportunity to announce that the dairies have donated funds to NKT as an expression of solidarity. Domestic dairies have not changed the invoice prices of their products since 2007, although the prices of most inputs have increased over the last 13 years. To this we should add that thanks to various types of rebates, including promotional rebates, the average wholesale and retail prices of domestic dairy products are about eight times lower today than in 2007. The retail prices of our products are lower than the prices of imported products. Our consumers have recognized these facts, and with their loyalty to domestic products, they express their respect for the long-term price policy. As economics is a science based on numbers, it is easy to calculate when dairies that produce consumer dairy products (yogurt, cream and pasteurized milk) would lower the price 'even by five cents', in order to operate at the break-even point, or even enter into a loss and threaten regular settlement of one's obligations, and thus one's own business.
Why has the multi-month drop in the price of oil and its derivatives not yet been reflected in the selling prices of domestic agricultural and food products?
I will remind you that for the last 13 years, the price of diesel fuel went below EUR 0,75 and rose above EUR 1,35, while the invoice prices of our dairy products did not change. The reason for this is that oil is not a significant item in the cost structure of our products, especially bearing in mind that due to economic and environmental reasons, we use wood as an energy source, the price of which has increased in recent years.
Is the distribution of agricultural and food products on the domestic market oligopolized by the two or three largest chains, on which, it seems, the majority of sales ultimately depends?
I don't think we can talk about any oligopoly or anything like that, because our market is absolutely open with a large number of participants on the supply side (eg in the dairy sector alone there are more than 10 domestic and as many foreign participants). Another reliable proof that there is no word about oligopoly is that the retail prices are at a very low level, and very often below the prices in the environment, which is a characteristic of the market of complete competition.
Difficult affirmation of electronic sales
Life is moving more and more into the digital sphere, new sales models are being developed, and in neighboring countries there are already electronic green markets, stores... Are you thinking about any alternative ways of selling products in your company?
We are aware that the world is entering the process of digitization. Different business activities are characterized by different degrees of digitization. The distribution of our products, which is accompanied by modern software and hardware solutions, digital invoicing according to part of customers and automatic posting of the same, digital receipt of orders from part of customers is confirmation that we have stepped into this world. With the Amplitudo agency, we even implemented a project of electronic order receipt, and thus digital sales. However, we must state that mass electronic sales and its success require digitization on the supply and demand side. We estimate that the specificity of the distribution of our goods, which requires respect for the cold chain to the final consumer, the fairly fragmented Montenegrin market, as well as the underdeveloped electronic demand make it difficult to affirm the electronic sale of dairy products in Montenegro.
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