A longer shelf life would allow more imports and lower prices
According to the law, in Greece any milk with a shelf life of up to five days is considered «fresh.» In this way the local industry is protected, since five days is too short a period of time to allow imports, so the manufacturers are protected and only primary produce is imported. This is why milk is cheaper in other countries. In the Dutch retail chain Albert Heinj, a liter of milk costs 0.65 euros, at Tesco’s in Ireland 0.85 euros, at Eroski in Spain 0.85, and at Rewe in Germany 0.65. At Greece’s major retail chains, the average price per liter is 1.14 euros. Even the cheapest is more expensive than all of the above countries, since based on data provided by Delta Dairies’ managing director Athanassios Yiannakakos, prices per liter range from 0.89 to 1.95 euros. This refers to products from firms with a nationwide sales network, since firms that distribute their products solely within their own region charge less because they are not burdened with distribution costs. Giving milk a longer shelf life would permit imports from other countries and facilitate the development of private labels for supermarket products, boosting competition. It would also help domestic firms, particularly those with a nationwide distribution. «This would lower costs and therefore the retail price,» said Yiannis Theotokas, general director of Friesland Hellas. «One only has to consider the amount of expired milk returned from supermarkets. It often cannot even be processed for making cheese,» said Dimitris Sarantis, managing director of Olympos dairy products. «These days firms can guarantee a shelf life for milk of seven to eight days,» he added. Sarantis believes that the five-day limit was aimed at protecting dairy firms and livestock breeders. However his firm as well as FAGE, according to the firm’s general director Yiannis Granitsas, do not want to change the current status but prefer to restrict competition rather than reduce costs. In Europe, pasteurized milk is kept on the shelves for an average of seven to 10 days. In some countries, such as Denmark, milk is sold for just one or two days, but in others, such as Canada, technology is available which can guarantee the safety of pasteurized milk for up to 12-14 days. The fear of competition from imports appears to be powerful, but the situation will quickly change, like it or not, in 2007 when Romania and Bulgaria enter the EU. «The transport map will change, making it easier to import milk at lower prices. For example, in Germany the producer price is 0.28 euros per liter. Add to that 0.30-0.50 euros for transport and you can import it at a cost of about 0.35 euros. In Greece firms pay the producer 0.37-0.40 euros,» he said. Since the advent of the Lidl supermarket chain, own-brand milk has entered the market, although mainly in evaporated or long-life form. Still, its availability, especially fresh milk, is still in its early stages compared with other products (such as pasta) and with other countries. According to an international survey by ACNielsen, sales of own-brand fresh milk are valued at $11.5 billion, about 18 percent cheaper than brand names. Based on price samples taken on April 18, 2005 in England, the Sainsbury, Tesco and Safeway chains sell own-label milk at 0.80 euros per liter, and Morrison’s at 0.79 euros. Greek consumers undoubtedly have a wide range of products to choose from, but 49 percent prefer fresh milk. The market is dominated by three firms. According to the latest available figures from ICAP, Delta, FAGE and Mevgal account for 75 percent of the market (Delta 42 percent, FAGE 17 percent and Mevgal 15 percent). The Competition Commission announced last year ahead of the Olympic Games that it would carry out a survey of the dairy industry, but the results have not yet been released as to if and to what degree the competition is healthy, given that consumer spending on these products is high and therefore the prices, quality and range of choice affect consumers’ well-being. In fact, just last week Deputy Development Minister Yiannis Papathanassiou announced a crackdown on firms to ascertain whether the law requiring country of origin to be clearly labeled was being observed. Not enough milk is produced in Greece to meet the country’s needs. That much is known. We produce 720 million liters but we need 2,020 liters; so we import 1,300 million liters. The question is not that we import, but what the importers of primary produce are distributing and whether the consumer pays the proper price for the end product. The firms maintain that they only sell domestically produced milk as fresh. The law does not require them to label the carton with the country of origin of the primary produce, but it also does not forbid them from doing so. The consumers only have the manufacturers’ word to go by. Only the state is in the position to restore order and inform consumers responsibly. It has the means in the form of existing legislation and control mechanisms. According to ICAP, evaporated milk comes second in consumer preference, with 108,901 tons, of which 83,167 tons are imported, mainly from the Netherlands and Germany. Another 65,000 tons of highly pasteurized milk is consumed, most of it imported, and 22,850 tons of long-life milk, 76 percent of which is imported. Another 2,733 tons of sweetened condensed milk is also sold, mostly to manufacturers.