Milk subsidies again at issue in Croatia


Dairy producers joined farmers and workers in protesting the government's austerity measures.

By Drazen Remikovic for Southeast European Times in Zagreb -- 01/11/12


The Croatian government is facing a wave of anti-austerity protests. [AFP]

The Croatian government is expected to present a "milk package" -- a key document in accordance with EU dairy rules -- to set producer-processor relations, including the price.

The package will be drafted in hopes of appeasing the hundreds of dairy farmers in the country who said they need the purchase price of milk to be increased to 0.52 euros per litre, from the current 0.3 euro per litre, in order to make a profit.

Dairy producers took to the streets last week, suspending milk deliveries, to protest low purchasing prices for milk amid government efforts to address the issue as well as other anti-austerity demands.

"We have urged the milk producers not to suspend milk deliveries because they may harm themselves and the dairy industry, and further exacerbate the already difficult situation in this sector," Miroslav Kuskunovic, spokesman of the Ministry of Agriculture, told SETimes.

At present, the government subsidises 0.12 euro per litre of milk.

"Hundreds of farms lock their doors because of the miserable milk price. Buyers have announced that they will increase the purchase price to 15 cents, a 1-cent increase. Can the picture be clearer than that?" Igor Resetar, president of the Croatian Association of Milk Producers, told SETimes.

About 2,220 farms closed in Croatia last year, and 963 have closed in the first eight months of this year.

Resetar said the producers cannot take the daily reductions in price and will not give up their demands; they will spill the milk or give it to citizens for free rather than deliver it to purchasers.

Protests about the purchasing price of milk are the latest evidence of the public discontent facing the social democrat-led government over austerity and unemployment.

By cancelling all public-sector collective agreements in mid-September, the government paved the way for cuts in employees' wages and benefits -- a move they said saved 440 million euros.

On October 13th, more than 7,000 teachers and medical personnel marched through Zagreb in the first major protest against the government's austerity drive.

Ruza Ljubojevic, 48, a teacher in Osijek, told SETimes teachers find the financial situation unbearable.

"An average salary in the school system is about 600 euros [a month] and the government is planning to save 80 euros on each payment. That's a lot of money for us. The government said it would not save on social categories of people, but tricked us," Ljubojevic said.

"What is next, abolishing our pensions so they can save?" he added.

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Prime Minister Zoran Milanovic said that he was sorry it came to decreasing school employees' earnings. "The necessity of cutting teachers' salaries was one of the worst things, but it had to be done," he said.

The first effects of austerity measures hit on March 1st when the government increased the VAT rate by 2 percent, to 25 percent.

Even with public sector cuts and layoffs, Croatia's state budget for 2012 is 14.6 billion euros, and expenditures amount to 15.5 billion euros.

Fitch Ratings affirmed Croatia's BBB-credit rating, the lowest investment grade, and gave it a negative outlook because of its budget deficit.

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