World Grain - November 2009 - 25

COUNTRYFOCUS

MILLING OVERCAPACITY
The amount of actual milling going on
in Bulgaria is way below the theoretical
capacity of the mills. According to Peter
Hristov, they could process 2.9 times the
country's actual needs. At present, 146
of the 369 mills in existence are working with a capacity of 2.3 million tonnes.
They could process 1.9 times actual demand, which means they are working at
52.17% of actual capacity. He described
competition in the industry as acute.
In 2008-09, around 327 tonnes of special flour for croissants were imported
from Greece, Italy and France.
He put the wheat crop in 2009 at 3.65
million tonnes. In 2008-09, Bulgaria's
biggest export market was Spain, followed by Romania, then Greece.
There are some big milling companies.
By far the largest is Sofia Mel with a capacity of 750 tonnes a day. Mill Sliven
can process 300 tonnes a day, while Mill
Varna and Goliam Dobr. Mill and Koop
Simid-1000 all have a 250-tonne-a-day
capacity. There are 42 milling companies
listed by the millers' association with a
capacity of over 100 tonnes a day.
The milling industry faces a wide
range of problems. The low quality of
the wheat produced in Bulgaria means
that flour millers have to put in additives, adding to costs. The problem
could be dealt with by subsidizing seeds
to farmers, but what has been done so
far has not been enough. That means
that only around 50% of area is sown
with quality seed.
He also criticized the major role played
in the flour milling industry by the socalled "gray" milling sector, which he
reckoned accounts for 35% to 40% of
production. These are mills which don't
pay tax or social security, something
which he said cost the country 25 million
leva in VAT (sales tax) alone. "This shady
business constitutes unfair competition,"
he said. He called for political will from
the government to deal with it.
At the same time, he complained that
the rate of Value Added Tax was high at
20%. The Union of Bulgarian Millers has
been pressing for a preferential rate of 8%

to 9% for food, which is along the lines
of the system in most E.U. countries. The
high VAT rate is one of the main reasons
which the gray part of the industry exists,
he said.
BIOFUELS SLOWLY GETTING GOING
So far, biofuels have been slow to get
off the ground, although the European

Commission believes that the potential
is there. "Renewable energy projects are
financed by the National Rural Development Program, which is applicable to all
projects related to investment in rural areas," the USDA said as part of a report on
the sector E.U.-wide earlier this year. "No
other special funds for biofuels exist."
As part of the E.U., Bulgaria is com-

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