Mr. Petkov, as recently as last week you raised the alarm about a huge overcharge of water for producers from “Irrigation Systems”. How will this affect the production of raspberries and strawberries, and have you taken any steps to respond?
We informed the Ministry of Agriculture and “Irrigation Systems” as early as March 1 with a letter, as soon as we found this drastic increase, because the prices compared to the 2022 season have been increased by up to 300% in the different stages of water supply, which is extraordinary shocking, I would say outrageous and impossible to implement. Water from 22 cents on the first floor has gone up to 2.23 cents, which is a huge amount. In this situation our answer would be – not how much will the price of strawberries increase , and whether it will even be competitively possible to produce at these water prices, because this price makes the production of strawberries and raspberries extremely unprofitable. And if the price of water for 1 decare last year was within 80-120 BGN, at this price can reach BGN 720-800. This radically changes all our calculations, contracts and preliminary contracts, and this somewhat calls into question whether it will be possible to produce strawberries and raspberries at all at these prices. 10 days ago we had a meeting with “Irrigation Systems”, with two relevant deputy ministers in the office of “Irrigation Systems” in Sofia, and our proposal was insistently that the price remain as it was in the 2022 season. At this meeting, Mr. n Machuganov from grain production proposed that even as a crisis measure, the price of water for Season 2023 should be free, i.e. to be covered by a state resource. And according to a quick calculation, we found that it is about 15-16 million, which is not a large financial resource, against the background of the aid and assistance that is provided both for Ukraine and as crisis situations, etc. And the Ministry gave a promise that they will make quick shuttles, calculations and consultations with other ministries – the finance or the economy, to see how and in what way funds can be found. But unfortunately, from then until now we have no written information of what has been done or what has been achieved in this direction. And in response to what we had promised ourselves, on March 21, Tuesday, we are organizing an extremely large, mass protest in the area of the city of Loznitsa. That’s what I can say in summary, because really in this water price situation, the question is not how, but whether strawberries and raspberries will be produced in this case.
This is terrible, I hope the state will step in and help you. And in general, in relation to the crisis in which most industries are currently and the rise in prices – are you receiving the necessary help from the state and from the European Union?
We are realistic about all possibilities for assistance. Aid was released to support strawberry and raspberry greenhouse production, but unfortunately, it is of such a limit that it was exhausted already last year, and by this measure practically no one benefits. Now we expect to have additional aid because of the conflict in Ukraine, but this aid, against the background of the drastic increase in fertilizers, preparations and electricity, I would say so – is not an essential part or element of aid, but nevertheless, it has its fruitful effect within the framework of ensuring that farmers do not fall into such a financial collapse. Because for one reason or another, at the given moment, the subsidies for tied support, which last year at this time had already been paid out, are also late, because now is precisely the critical moment when we do winter spraying, when we fertilize strawberries and raspberries, and separately – a large amount of manual labor is already starting to be done in the field and expenses for it. And at this moment of crisis, every single lev is needed and useful, so whether it comes from the money we expect from the tied support or from the emergency aid, it will be extremely useful. But at the given moment, both of them are late, we also don’t know for what reasons. And perhaps you see that the situation is such that colleagues from other sectors are already protesting, because the situation is really difficult in all sectors of fruit, vegetables and grain production.
It absolutely is. I even think there were farmers’ protests again this week.
Even today, today is also there.
Even today, yes. What other problems are you facing?
Well, the problems are complex, starting with the fact that for another year for strawberries and raspberries, the funds for winter spraying are insufficient as a financial resource and insufficient in terms of the number of preparations needed to combat pests during the winter season. Water is the biggest problem at the moment, because the innovations and technologies that we have invested in are extremely expensive – the strawberries are 99% equipped with drip irrigation systems, we also introduce the fertilizers precisely using the drip irrigation system, and it needs water. If there is no water, we practically cannot nourish our strawberries under the plastic, because even if it rains, first of all, the roots will remain dry. And the most important thing is that now is the time to start feeding in order to have a good and full harvest. If this feeding due to lack of water or expensive water is delayed, we will realize losses within 20 to 40% of the crop. If we turn this into money, it also becomes a staggering amount. For example, if we have a planned yield of 1000 kg of strawberries per hectare and lose 30%, that’s 300 kg, 2 BGN each – that’s 600 BGN. And BGN 600 for water – so our costs from water losses alone are BGN 1,200. And the income from 1 ton will be approximately BGN 2,000. So we have BGN 1,200 as a starting loss, we may have. These situations are a confirmation of my words that not how, but whether we will produce strawberries and raspberries this year, because by adding these costs, it may happen that the strawberries acquire such a price that we cannot sell them. And a good manager, making simulative combinations of income and expenses, and see this result in advance, because this was our idea – to have interactive technological maps, which the Ministry has not yet presented, but we have our own developments that can show even before the season what situations can play out with the price of water, with the price of fertilizers or manual labor. And when we play out such situations and see that the result is negative, we approach very cautiously, because according to an old Bulgarian custom and proverb, everyone says “Well, we fought all season and finally, when we hit the line, we saw that we were at a loss”. However with the developments of the Association of these technology cards we can now do this “scrambling” on the computer and see, even before we have spent our financial resource and labor, where things are going, whether they are going to a loss, or a profit, or to zero, etc.
Mr. Petkov, does this mean that there is a possibility that there will be almost no Bulgarian strawberries and raspberries on the market?
Yes, there is such an option, because the competition is very strong, and there are people who have already started importing foreign strawberries, and the few strawberries we have in the greenhouse can be threatened by these imports. Although we have imposed conditions on both the ministry and the chains that when the production of our strawberries begins, be it from greenhouses or outdoors, the importation of the same should be reduced or be within the limits that would create a deficit. There is another element here: producing comparatively more expensive strawberries, which are from imports, but tastier, better quality, these strawberries find a market, which is, for example, in Romania, because in the region of North-Eastern Bulgaria, where there is a large concentration of strawberry production, the Romanian market there, or especially Bucharest, which is a commercial center much larger than Sofia, and relatively more expensive than imported Bulgarian strawberries, but more valued, go there. And it is not a great tragedy that there will be no strawberries on the Bulgarian market, but they will be produced, but they will not be for Bulgarian producers for two reasons, that they will be more expensive than imports from, for example, Turkey and Greece, but they will be preferred by another market that is closer. Because, for example, Bucharest is 80 km away, closer to the strawberry region, and Sofia is 250 km away. So the problems are complex, but we expect the Ministry of Agriculture and “Irrigation Systems” to solve the water problem first, which we expect to happen before Tuesday. But if what we expect to happen does not happen, there will be protest actions. And we think that in this way we will really be heard and the necessary measures will really be taken, because the water in the Republic of Bulgaria is state public property and trading with it is inadmissible. And the fact that we pay “Irrigation Systems” for water transfer, and at a 10,000% markup, is an indicator that this company is not run according to any business and management principles norms, but is just a hole in which money is poured into the sand, and both the water and the finances that go to this company leak out. And I’ll give you an example of water losses: for every 100 liters of water supplied, 80 liters are lost. You can imagine what huge amounts of water go to waste. And we fight for every drop of water. As I told you, especially for strawberries, we have 99% established drip irrigation systems, which lead to exceptional economy and extremely accurate and efficient use of water, because it goes exactly where it is needed – to the root system without waste. And against the background of these huge investments that we have made for these drip systems, to receive the most expensive water in Europe and for it to be a key factor in our production, we do not agree with this at all. Moreover, all strawberry and raspberry producers operate on the same market, and the price differences are several times, for example in one region the price is 22 cents, and in others 2.20 BGN, which creates an exceptional business advantage, which I would say it’s an official crime. We also gave this as information to “Irrigation Systems” and to the Ministry of Agriculture. And yesterday we sent our letter to the President of the Republic of Bulgaria and to the Prime Minister.
Finally, I want to ask you as the president of the association and a producer, can you still predict what the prices of strawberries and raspberries will be in the market? Will there be a serious increase?
I can’t make any predictions until the first step is resolved because for us that is the key factor. We have prepared our possible scenarios, but they will be most affected when the “Irrigation Systems” comes out with a position. So, we have two options: the water will be at the price of Season 2022, the other is that it will be free as a crisis measure to help absolutely everyone, not only for producers of strawberries, raspberries, fruits and vegetables, but also for grain producers, for rice producers, for the entire agricultural branch that uses the services of “Irrigation Systems”.
Tags: price water production strawberries raspberries extremely unprofitable