By Wissal Ayadi / Analyst G.NET Tunisie Financial Website (dated Sep 6th, 2022)

With the energy and food crisis inflicted on the world by the Russian-Ukranian war gaining momentum, the shelves in the Tunisian supermarket chains are progressively emptied. There was first the mineral water shortage, then the flour one, then sugar and now it’s the milk and butter one. The milk sector, however, is an old story of structural difficulties which started with the January 2011 revolution. For many years the cost of animal feed was rising while the farmers were unable to raise their sale prices (milk prices are regulated in Tunisia). At some point, the milk production has become much of a burden for the farmers, a loss-making business that pushed thousands of them to sell their animals to the slaughtering houses. With the recent rise in energy prices, the milk centres were finding it extremely difficult to collect raw milk. At the same time, the government was dragging its feet to allow a price rise for the farmers using the strategic milk inventory to satisfy the demand in the market. In a matter of few weeks the strategic milk stock has completely melt down. The Tunisian milk sector dates to the mid-1980s. The chain starts with farmers whose total population is hovering around 112,000 people each raising small cattle of 4 to 5 cows. Then we have the collecting centres (11 centres) which collect 3 million litre per day then the production units (45 milk plants). Starting the year 2000 Tunisia has become self sufficient in milk. Following the recent international crisis (pandemic, then war), the Tunisian strategic inventory of milk has gone from 50 million litres in 2021 to 25 million litres in 2022. As for butter, the strategic inventory has gone down from 1000 tons in 2021 to 100 tons in 2022. Butter has rapidly disappeared from the shelves because many industrial companies in the chocolate business, or pastries have been importing butter in consistent volumes. But with a packet of butter at 8 Euros in the Euro-zone, all of them have rushed to the local market. Most of the cows existing in the Tunisian farms are Holstein cows which are capable to yield 8000 to 1000 kilos of milk per year/per cow. With the cost of feeding skyrocketing, many of the farmers have sold their cows to the slaughtering houses.

Karim Daoud is a farmer. He is the President of the farmers’ main union SYNAGRY. He has lately declared that Tunisia has done well in terms of organizing the industry. It has brought the cows, created the collecting centres and the production units. But no one thought about the cost of feeding the cows. He estimates the cost of feeding at 70% of the total costs per litre of milk or 1 kilo of red meat. The cows are fed by concentrate made of soya and corn which are mainly imported from Europe. “With food prices soaring because of the covid pandemic and the war in Ukraine, it is high time we thought of planting our own soya and corn”. Said Karim Daoud. With milk prices controlled by the government and the cost of milk rising, the farmers have been losing money on the milk they produce to reach 0.60Dinar per litre (loss on the litre). “It’s always the small farmers that pay the price. Why on earth should the government accept to raise gas prices in the gas station when energy prices soar in the international markets and doesn’t do the same for the farmers?” He added. And the gap between cost and sell prices is widening. The price of a litre of milk is currently at 1.6 Tnd, the government fixes the sale price at 1.2Tnd. “It is, as if, the farmer is subsidizing the consumer. It’s the government’s responsibility not the farmers’ ” The sad part of the story is that soon the government will run out of milk. It will import milk at 3.5 Tnd per packet from Europe which is way higher th the price of a packet of milk locally produced.