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Bulgarian farmers angry with crisis

  Hard-pressed farmers buckling under debts, high costs and weak prices in Bulgaria are becoming more militant in a bid to force government help for a sector that was already on life support before the crisis.

Farmers are frustrated that endemic corruption and bureaucracy are blocking their lifeline -- €6.5 billion ($8.8 billion) of subsidies and rural area aid from the European Union earmarked for 2007-2013 for its new member.

Many borrowed heavily to bring their farms up to EU standards. Nowadays their output accounts for 5-6% of GDP, down from more than a quarter until the 1990s. Once an exporter of foodstuffs, this Balkan country of 7.6 million people is now a net importer.

On top of low milk prices and cheap imports, the global economic crisis is fuelling discontent in the EU’s poorest member state.

“Things are already getting out of control. I am against taking extreme actions...but there is no other way,” said Boiko Sinapov, head of the Association of Livestock Farmers.

Farmers have staged a series of protests, including a one-day blockade of a border-crossing with Romania: these failed to attract much support or state aid but more are planned.

Valentin Dimitrov has a small livestock holding near the village of Svoboda in the Rhodope mountains in southern Bulgaria, and says he needs help now. He has already slaughtered one-third of his sheep and might soon have to hand his farm to the bank to cover debts. “The farm is my life ... but I can’t take it any more,” said Dimitriv, who raises 400 sheep and 50 cows.

“To avoid struggling for another 20 years, I would call it quits, leave the farm to the bank and wave goodbye,” said the 45-year-old who has taken a BGN 150,000 (about $104,000) loan to bring his idyllic farm up to EU standards.

Analysts say pressure on the government here and in fellow ex-communist countries is likely to grow as the crisis erases gains made in the past decade.

Farmer discontent over falling incomes preceded the fall of the Latvian government in February, and farmer protests in Greece forced the conservative cabinet to pledge €500 million in state subsidies to make up for low prices.

Earlier this month, dairy farmers from several nations rallied in Prague over low milk prices and EU rates.

LIVESTOCK SECTOR DECLINES

“We are totally in the red. We are in collapse, such a collapse that we cannot pay our loans,” said Sinapov of the farmers’ association. “But we will fight for the sector, we will not leave things as they are.”

While the protests may not directly threaten the Socialist-led government, which has an overwhelming majority in parliament, they may force it to yield to demands for more aid before elections due in June or July.

Livestock breeders are among the most affected farmers of new EU members because they have taken millions of euros worth of banking loans to modernize their farms to EU standards. They are also squeezed by rising costs for feed, and pressure from retailers and importers to sell at lower prices.

In Bulgaria, a liter of milk fetches BGN 0.30-0.40 ($0.20-0.28) at farms, while the price in the shops is BGN 1.60-2.00 ($1.1-1.4) and farmers buy animal feed at BGN 0.50-0.60 ($0.35-0.42) per kilo.

As a result, cattle numbers have dropped to 577,000 from about 700,000 in 2004 and more than 1.6 million in the 1980s during the communist era. Sheep numbers fell to 1.8 million last year from more than 2.1 million in 2004 and some 10 million in the 1980s.

In the Czech Republic, where milk prices have hit their lowest since it joined the EU in 2004, farmers want 40 euro cents ($0.55) a liter, double the current market price.

After years of post-communist stagnation and patchy reforms, farmers pinned hopes on the EU subsidies Bulgaria was due when it joined the bloc along with neighboring Romania in 2007.

Instead, Brussels froze €140 million in pre-accession aid last year over fraud, and threatened more sanctions. Transparency International, a global anti-graft network, last year portrayed Bulgaria as the EU’s most corrupt nation.

“The most annoying thing is that there is a lot of talk about EU subsidies being paid but nothing gets to us,” said Dimitrov who like many others had hoped to tap the now-frozen EU money to pay back his loan.

RED TAPE TANGLE

Corruption is not the only curse.

Excessive bureaucracy and lack of qualified specialists in the farm ministry have caused havoc with EU payments and eroded banks’ trust in funding farm projects, industry officials say.

The ministry’s payment agency admitted earlier in March that 3,000 farmers would not receive subsidies for 2008 due to an administrative error which wrongly described their land as idle.

“The administrative negligence and careless attitude to people’s business, ignorance and the lack of administrative capacity is what blocks EU funds,” said Ivailo Todorov, head of the Agriculture Producers’ Association.

Other sectors such as vegetables and fruit also suffer. Analysts say agriculture’s share of GDP will shrink to 2-3% in coming years because of low efficiency and lack of investment.

Poorly designed support during the 1990s -- subsidies for small non-productive farms, high food import duties and delays in complying with EU standards -- ultimately harmed producers.

Past protective measures including a ban on foreign ownership of land left farmers unprepared for the competition of the open EU market, leaving farming the least-developed sector in the Bulgarian economy.

“This problem ... now comes back as a boomerang,” said Georgi Angelov, economist at the Open Society Institute in Sofia. He said Bulgaria had more milk producers than Germany but produced 25 times less milk. Lower productivity also means higher prices, which have been an incentive for food imports.

Even traditional products such as tomatoes and apples are now imported from neighboring Turkey, Greece and Macedonia. In Dimitrov’s mountain farm, his father Mincho says the authorities should wake up to the reality that food problems and hungry people spell trouble.

“Without agriculture they are heading nowhere because the bread comes from farming. Without farming, without food, how can a person survive?” said Mincho, 67. (Reuters)