TIRANA, Apr. 30- The consumption of meat and its by-products in Albania marked an increase in 2018, although domestic production remained the same. The main companies continued consolidating their position, though the need for raw materials is being met by the import. Food safety remains a challenge, hampering the exports. The top eight meat processing companies in the country circulated 80.9 million euros.
Meat and its by-products are basic products of the consumer basket. Albania as a developing country, lags behind average per capita consumption compared to developed countries. The meat processing industry has been steadily growing, though food security remains the “Achilles heel” for the sector. The eight main companies declared about 80.9 million euros in revenue during 2017, with a slight increase of 1 percent. Jona Leka who is marketing manager at EHW, the largest meat company in the country for circulation, said Albanian companies own about 75 percent of the market, while the rest are importing companies.
EHW was established in ’92. In 2017 it achieved over 40.45 million euros in revenue from sales, with a slight increase from the previous year, responding to about 50 percent of the total revenues generated by the country’s eight largest companies. Leka said the sector maintains the same pace in recent years and that import is gaining ground due to the abolition of the customs tariff for processed meat products for some countries.
In the second place for the highest turnover was ranked the Yzberisht Meat Combinat (KMY), with a total income of 19.4 million euros. KMY’s sales shrank by 8 percent compared to the previous year. Hako company ranks third with 34 percent more revenue at a value of 5.78 million euros. This company marked the largest expansion in the market in 2017. Meat company Tona resulted in shrinking activity during 2017. According to the financial statements published at the National Business Center, this company ranked fourth, generating sales revenue of 5.69 million euros, shrinking by 7 percent.
Fix Pro which ranked fifth also circulated more revenue from sales in 2017, with a 10 percent increase. Nesti Tarusha who is the company’s administrator said growth was easier in 2018. He said the trend has been rising, but the increase has been minimal. Company Kazazi also reported an increase in revenues of about 32 percent comparing to the previous year. Revenues amounted to 2.92 million euros. Following Kazazi is ERDA with 1.45 million euros circulation. In the last place came Meat Master which activity shrank by 11 percent in 2017, with 420 thousand euros in sales. Based on the financial statements that companies have submitted to the National Business Center, EHW, Fix Pro and Tona are among the companies with the highest profit rate. The net profit margin for meat processing companies (after-tax profit) fluctuates between 1 and 8 percent.
Increased meat consumption and emigration effects
In the last two years in Albania the meat consumption is estimated at about 70 kg per capita. The business and economy magazine Monitor calculated the amount consumed by adding domestic imports to the country and deducting the amount of meat exported from Albania. The results showed that since 2009, when about 64 kg per capita was consumed, meat consumption has increased steadily at a modest pace. The main operators claim that the trend of meat consumption is on the rise.
But representatives of the company Hako argue that there is no weakening trend for personal consumption, but a decrease in population and this is reflected in consumption. Antonela Mema from the Hako company explained that the collapse of the population has come as a result of chaotic emigration, leading to a general reduction in the total consumption. Compared to the developed countries where meat consumption exceeds 100 kg per year, in Albania, which a developing country, the growth trend is expected to continue.
Domestic consumption hasn’t changed
According to official data from the Ministry of Agriculture in 2018 the domestic production was estimated at about 161.3 thousand tons, with an insignificant increase of 0.1 percent compared to the previous year. The production of meat is divided into four large groups, beef, lamb, pork and poultry, where only domestic lean meats production has grown. Bovine meat, swine and poultry has dropped, leaving space to imports.
The production of bovine meat for 2018 was 68 thousand tons, from 72 thousand tons in 2017. Pork production was reduced to 16.9 thousand tones in 2018, from 17 thousand tons. A drop was recorded from the production of poultry meat, which has had an upward trend since 2012. In 2018, 19.7 thousand tons of poultry were produced, from 20 thousand a year ago. Domestic production does not respond either to the demand of processing companies for raw materials, which require quantities that small farms in the country can not meet. Fragmentation of agricultural land has created small farms with 1-5 livestock heads and with an average area of ”‹”‹1.4 hectares.
Lack of traceability affects exports
Exports of meat and its by-products from Albania to EU and CEFTA countries have been limited, although to key operators they meet the requirements on safety standards. The main reason for limiting exports to EU countries is the lack of traceability in animal origin products in the country. The cattle matrix process in Albania has not ended. Consequently, according to operators, Albania is marked as an unsafe place of origin. They claim to encounter export barriers in CEFTA member countries with which we have free trade agreements. Mostly the countries of the region, through non-tariff barriers, hinder trade in “Made in Albania” goods by adding hygienic sanitary controls to their customs. According to market operators, protectionist measures are taken by authorities for local businesses there.
By 2018, Albania exported about 568 tons of meat, from 365 tons a year earlier. Referring to data from the Albanian Institute of Statistics (INSTAT) on foreign trade for meat, in the last 10 years exports recorded the lowest value in 2013-2015, taking markets again in the last two years. According to calculations from Monitor, one kilogram of meat exported from Albania is traded at an average price of 625 leks (5.05 euros) per kg.
Imports origin
39.7 thousand tons of meat were imported in 2018, with an increase from a year earlier. Almost 30 percent of the imported meat in 2018 in Albania came from Brazil, weighing about 10,000 tons. Second place with 16 percent of the total imported meat originated from the United States of America. These two countries are responsible for almost half of the meat imports. The average lek value of one kilogram of meat entering Albania from these countries were respectively 212 lek (1.71 euros) per kg from Brazil, and 107 lek (0.86 euros) per kg from the USA.
The authorities have frequently blocked meat loads from Brazil due to non-compliance. Low price is related to poor quality. However, since these two countries have large farms with many livestock heads, they benefit from economies of scale and produce a lower cost product than in Albania, where farms with 1-5 livestock heads predominate. Greece and Italy are two other countries with weight in imports, respectively 14 and 12 percent. One kilogram of meat imported from Greece has entered an average price of 0.57 euros per kilogram, while from Italy it is 1.06 euros per kilogram. The ranking is followed by Germany with 8 percent and Poland wit 6 percent of the total imported quantity, of which mainly pigs are imported. In Poland, large breeding and growing pig farms have been set up, increasing the competitiveness of this country in this segment. However, the imported pork is mainly used for sausage production.
Albania has cheapest meat in Europe
Price levels for meat products and consumption rank Albania as the cheapest country even among countries with its lowest consumption. Eurostat published the statistics on the meat price index in 2017 for all EU member states, candidate countries and potential candidates. Albania ranks last in terms of price levels, where meat costs about 45 percent cheaper than the average of European countries (EU = 100). Compared to Western Balkan countries, the level of meat prices is cheaper. Following Albania comes Macedonia, where meat costs about 42 percent cheaper than in European Union countries. Meat costs more expensive in Kosovo, about 13 percent higher compared to Albania. On the second place for higher price levels in the Western Balkans, is Montenegro and Bosnia, where meat prices are about 12 percent more expensive than in Albania. Then Serbia with 9 percent more expensive than our country.
When compared to developed European countries, meat costs more expensive in Switzerland, where the price level is 2.4 times more expensive than in the rest of Europe. According to Eurostat data the price level is largely higher in the countries of North Europe such as Iceland, Norway and Luxembourg. In 2017, Luxembourg had the highest meat prices among EU member states, about 41 percent more expensive than the European Union average. Then comes Austria where prices are 39 percent higher than the European average. From EU member states, Poland was the country with cheapest meat prices at about 43 percent cheaper than the European Union average, followed by Bulgaria with about 42 percent cheaper.
Domestic market challenges
Jona Leka who is marketing manager at EHW, said that one of the challenges the domestic market face is innovation. She said that as the market is being dominated by grocery stores and supermarkets, the industry is focusing increased product life expectancy and reduced packing sizes, always meeting the domestic and European food safety standards. Another issue is the lack of a domestic pork production for by-products processing, because modern plants for meat growth are absent. Thus the companies will have to import these raw materials, which leads to increased import costs and costs incurred by the customs tax. Another problem is the fact that the inspection system for the control of animal products in Albania is considered unreliable by European countries. Consequently, these states prohibit the export from Albania of any product of animal origin, starting from meat. This damages the exports of Albanian industry excessively.
Spiro Lengo from KMY said that food safety is the main focus of the company, but a difficulty they face is also ensuring raw material, due to the condition of the stock breeders. He said meat production in Albania faces many difficulties, one of the most important is the large number of small-size farms. Nesti Tarusha from Fix on the other hand said that the animal matriculation system is flawed, and thus minimized exports, because livestock origin cannot be determined and that fall short with EU directives.
