Alexander Aleksiev in front of FACTI The biggest price distortion is at the end of the food chain

Food prices are once again in the focus of society, and the tension between producers, processors and retail chains is growing. Why does the farmer sell cheaply and the consumer buy expensively? Where along the chain is the real value of Bulgarian production being lost? Alexander Aleksiev, owner and manager of the largest individual sheep dairy farm in the country and manager of the Bulgarian Farmers' Cooperative, speaks to FACTI.

- Mr. Aleksiev, food prices... This is the big topic in the country. Where is the biggest distortion when we talk about the livestock sector - between the farmer and the dairy or between the dairy and the chains?
- The entire dairy livestock sector is in a dangerous imbalance. On one side we have farms that sell at or below cost. On the other side we have final prices in the store that seem increasingly high and increasingly difficult to explain to the consumer.
The biggest problem is that the value along the chain is not distributed fairly. The farmer bears the vast majority of the risk. He raises the animals, buys feed, invests labor, then comes credit, diseases, climate, investments... But in the end he remains the least protected participant.
Dairies also work in a difficult environment. They buy the raw material, process it, bear the costs of energy, labor, packaging, storage, transport. Of course, there are different models and different practices, but in the case of large processors, the direct pressure often comes from the conditions of the retail chains.
Therefore, in my opinion, the most serious distortion is seen at the end of the chain - where the product reaches the shelf and where the strongest participant has the greatest market weight. If we want an honest conversation, we need to follow the entire chain: from the liter of milk on the farm to the kilogram of cheese in the store. There it will be very clear who bears the risk and who collects the main value.

- How do you explain the difference between 1.00 - 1.20 euros per liter of milk and 30 - 35 leva per kilogram of sheep's cheese?
- First, we need to make a few clarifications, because the topic is not simple. Sheep's milk is a highly seasonal product. During the summer months, the supply is greater and this naturally pushes the purchase price down. However, there are farms like ours that produce year-round, with much higher fixed costs and a different organization of production.
The price also depends on other factors - quantity, quality, hygiene, location of the farm, regularity of supplies and reliability of the manufacturer. Currently, good sheep's milk in Bulgaria is priced at approximately 1.00-1.20 euros excluding VAT, with variations depending on the producer and the season.
The problem is that even at the upper limit, this price very often does not cover the real economy of a modern farm. At the same time, when we get to the final product, sheep's cheese is sold en masse at levels that show a huge difference between the value of the raw material and the price on the shelf.
Yes, cheese has costs for processing, ripening, curdling, packaging, logistics, labor, energy and commercialization. But the question is different: why does the producer of the raw material, without whom the product cannot exist at all, remain the most oppressed participant in the chain?
Here is the great injustice. The consumer cannot pay dearly, the farmer sell cheaply, and somewhere in between the value disappears.

- Is there cartel behavior in the purchase and trade of milk?
- I cannot claim that there is a cartel, because this is a legal issue and is proven by the competent authorities. I do not have such evidence and I would not allow myself to make accusations without facts. But I can say another thing: the market outcome is worrying.

When the farmer systematically works on the edge, when the purchase prices do not reflect the real costs, and the final product remains expensive for the consumer, there is clearly a problem in the way the chain functions.

Whether this is the result of excessive market concentration, unfair trade practices, weak negotiating power of producers, cheap imports, or a combination of all of these - this should now be the subject of serious institutional analysis.
For me, the more important question is not only whether there is a formal cartel. The more important question is whether the market works fairly. And currently the result shows that it does not work fairly for either the producer or the consumer.

- Why do farmers in Greece and Spain receive a higher price?
- The difference is that in countries like Greece and Spain, livestock farming is not seen only as a social problem or as a sector that needs to be periodically supported. There, it is part of a national economic strategy.
Greece is the clearest example with their Feta cheese. Feta is a national product, protected, developed and turned into an international market. It is produced according to specific rules, from local raw materials, with a very strong identity and control. Thus, the Greek state, Greek producers and Greek processing have built a product that sells national value, not just a kilogram of cheese.
When a country protects the origin, controls the quality, develops exports and creates a strong brand around its own products, then it can pay a better price to the farmer.
In Bulgaria we have traditional white brine cheese, we have history, we have taste, we have potential. But we do not have a strong enough national strategy to turn it into a protected, recognizable and economically powerful product on the international market.

- Have supermarkets become the strongest player?
- Yes, large retail chains are currently the strongest participant in the food chain. This does not mean that we should demonize them. They are serious international companies with experience, structure, logistics, market power and long-term strategies.

The problem is that when one participant becomes too strong, and the producer and the processor are fragmented and dependent on access to the shelf, the balance is disrupted.

Then the conditions are no longer negotiated between equal parties. In many countries there are mechanisms that protect local production - through control, through requirements, through stronger cooperation of producers, through short chains and through a clear policy for the presence of national products. Bulgaria should also think in this direction. It is not about declaring war on retail chains. It is about the state creating rules where the consumer has access to quality food, the producer receives a fair price, and trade does not turn the entire chain into a game with one winner.

- What is the path of a liter of sheep's milk to the shelf?
- The path of a liter of sheep's milk begins long before milking. It starts in the field - from the feed that we must produce, harvest, store and properly feed to the animals. Then comes care, nutrition, health, selection, hygiene, milking, cooling and storage of the milk.
The farmer does not have a day off. The animals must be looked after every day - regardless of whether it is a holiday, Sunday, crisis, heat or cold. After harvesting, the milk is delivered on schedule, directly to the dairy or through an intermediary, depending on the organization of the farm and the market.
The dairy processes it into a final product - cheese, yellow cheese, yogurt or another product. Then comes ripening, packaging, storage, transport, distribution and commercialization. Finally, the product reaches the store.
That is, when a person sees cheese on the shelf, he sees the last step. But behind it are months of work, many people, a lot of risk and a lot of costs.

- Who are the intermediaries and who profits the most?
- The chain can look different depending on the scale of the participants. Sometimes there is an intermediary between the farm and the dairy - a person or company that collects milk from several producers and delivers it to the processor. Then, for the finished product, there may be a distributor, a logistics company, a warehouse, a wholesaler and finally a retail chain.
In larger dairies, some of these intermediaries are eliminated because they sell directly to large chains. But regardless of the model, the main problem remains the same:

the weaker the producer at the beginning of the chain, the smaller part of the final price remains with him.

Who wins the most? Usually the one who has the strongest market position, the best access to the customer and the greatest ability to dictate terms. In today's system, this is most often the final retailer, because he controls access to the shelf and to the mass consumer.

- Do cheap imports undercut Bulgarian production?
- Yes, cheap imports put serious pressure on Bulgarian production. This does not mean that we should violate the rules of the common European market or think in isolation. But our country must have an active policy to protect its own production.
In different European countries there are different forms of support from quality control, protection of origin, strong national products, cooperation, export, marketing and better organization of the sector. When other countries can protect their producers within the framework of European rules, then Bulgaria can do it too. The problem is that if the Bulgarian producer is left alone against cheap imports, strong retail chains and weak internal organization, the result is predictable - farms decrease, production disappears, and the consumer becomes increasingly dependent on external supplies.

- If you had to name one main problem in pricing that affects both the producer and the consumer - what would it be?
- The main problem is that the chain is not transparent and not balanced. The farmer sells cheaply, the consumer buys expensively, and between them it is not clear enough who collects the value. This kills the motivation for production and at the same time punishes the end consumer. We do not need artificial price control. We need transparency, control over unfair practices and real protection of the Bulgarian producer.