This document analyzes the dairy livestock market in Bulgaria. It finds that milk production has declined in recent years. Cow milk makes up 87.2% of total milk production. The South Central region produces the most milk at 26.1% of the total. Most farms are small in size and fragmented in structure. The dairy sector faces serious problems including low productivity and competitiveness. Immediate steps are needed to modernize production and improve quality and efficiency to address these challenges.

1. DAIRY LIVESTOCK
MARKET ANALYSIS
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2. INDUSTRY OVERVIEW
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Bulgarian agriculture still has lots of unsettled issues, uncertain prospects for its
survival, serious difficulties for the farmers in general and a negative trend in all aspects
of the breeding industry.
1. Industry Overview Milk Production in Bulgaria (tons)
in figures:
Year Cow Buffalo Sheep Goat Total
2005 1 286 909 6 989 105 057 109 114 1 508 069
2006 1 298 709 7 132 107 535 102 297 1 515 673
2007 1 148 328 7 052 84 907 87 174 1 327 461
2008 1 143 190 7 173 88 243 77 465 1 316 071
2009 1 073 401 7 022 87 247 64 090 1 231 760
2009/2008 -6.1% -2.1% -1.1% -17.3% -6.4%

3. INDUSTRY OVERVIEW
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Milk Production in Bulgaria by regions (tons)
01.11.2008 – 31.10.2009
Regions Cow Buffalo Sheep Goat Total
North West 122 644 1 330 13 805 15 104 152 783
North Central 145 460 3 002 7 793 8 085 163 340
North East 169 188 373 15 633 8 190 193 384
South East 186 756 914 15 770 8 776 312 216
South West 132 815 1 066 14 465 13 072 161 418
South Central 385 374 1 319 16 831 9 057 312 481
Bulgaria 1 042 137 6 804 84 297 62 284 1 195 522
 1 195 522 tons of milk were produced during Y2009 and the cow milk is 87.2%.
 26.1% of the total quantity of milk is produced in the South Central Region of Bulgaria; on the
second place is South East Region with 17.8%; The smallest share has the South West Region with
12.8%.

4. INDUSTRY OVERVIEW
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According to the data of Ministry of Agriculture and Food the real situation of milk
livestock breeding in Bulgaria at 1st of November 2009 can be summarized as follows:
 The number of cow breeding farms is 14,4% less in November 2009 than November 2008;
 The number of milking cows has dropped by 5.7%;
 The number of farms breeding 1 or 2 dairy cows is 14,3% less than in November 2008 and
they breed 89 300 of dairy cows (representing c.a. 30% of all dairy cows in the country);
 The number of the farms breeding 100 and more cows has increased with 22.9% - 34 200
dairy cows in total
Number in cattle in Farms Milking cows
a farm Number 2009/2008 Number 2009/2008
1-2 72 120 -14.3% 89 300 -15.3%
3-9 13 253 -20.7% 59 300 -19.0%
10 - 19 2 977 4.5% 40 300 -8.6%
20 and more 2 211 6.1% 107 900 9,0%
TOTAL 90 561 -14.4% 296 800 -5.7%

5. INDUSTRY OVERVIEW
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The data in the previous slide shows the small-sized and fractured structure of the livestock
breeding in Bulgaria. The larger part of the farms is located in private yards within the settlements
and most of the livestock is bred there. The milk produced by such farms is for self consumption
and a part of it is supplied to the market, thus providing the farmers with additional income. The
positive trend that is observed is the increase of the number of farms with 20 and more heads.
 In May 2009 the number of cattle and buffalo in the livestock farms is 549 500 (6.3% decrease
compared to May 2008).
 The number of the cattle farms continued to decrease during the period May 2008 – May 2009
(-14.5%), but there is a trend of increasing of the average number of cattle per farm.
 In May 2009 the average number of the cows in a farm was 3.5, which was 9.4% higher than
the previous year. 565 farms breed 50 or more dairy cows (more than 59 000 cattle).
 The share of cow in all self-subsistent farms can be estimated up to 61%.
 The group of farms having more than 10 cows has grown – a growth trend in the middle-scale
Bulgarian dairy sector.

6. SWOT ANALYSIS
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 Strengths  Weaknesses
- The primary production of dairy sector relies on the - The production stage is strongly fragmented, small size
predominated and self-subsistent oriented thus it does not
extensive production technologies, as the price costs are
dispose with economic to scale advantages and significant
lessened due to the low prices of pastures and coarse possibilities for adoption of expensive technologies
fodder provisions
- The comparatively low level of the milk yield substantially
- A significant part of the dairy farming is located in the affects the competitiveness of national dairy sector thence
mountainous and lessfavoured areas, abounding with land the productivity is insufficient and subdues the overall
resources, pertinent for utilization and to additional support competitiveness
under CAP
- Some percent of dairy farms operating mainly in plain
- The dairy production in Bulgaria includes not only cow region do not have competitive advantages with other
milk and is significantly diverged by the sheep and goat milk production types, as subsidies allocated by single payment
(about 14% of the total) anticipating wider product supply per area turn out to be not successful mode for them. Most
of the farmers are landless.
- Bulgaria has strong export traditions of cheeses
- A significant part of the farms in Bulgaria are run by the
- The product portfolio shows the domination of very specific holders in not active age (41.4%), who consider their activity
domestic dairy cheeses (brined), which are preferred by as a supplement job rather than as profitmaximizing, seeking
customers and are not almost supplied from abroad thus the for expansion.
MPE’s have good competitive power

7. SWOT ANALYSIS
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 Opportunities  Threats
- About 14% of total production of milk is - The share of professional farms implementing a consistent breeding
derived from sheep and goat, as especially approach are minor portion, while other self-subsistent farms hardly might be
the conditions in Bulgaria are very propitious incited to change their technology
for their breeding, while these sub-sectors - The development of the alternative dairy livestock (sheep, goat, buffalo)
are not obliged with severe quality criteria requires extraordinary cares and measures that so far are not clearly launched
and standards by the State, which undermines their development
- The demographic problems in the dairy farming redounds to lack of adequate
- The measures undertaken for support of motivation and low interest by farmers
odernization (RDA) of the dairy production - The implementation of all EU requirements to primary and processing sector
unarguably will lift up the comparative in terms of quality and traceability are posted to the insufficient progress
advantages of the farms and will promotetheir - The national dairy livestock turns out to be very vulnerable from the fodder
competitiveness crisis due to adverse climate conditions, diseases, etc and the drastic increase
of feeding and vet costs affect production
- The accession in EU renders Bulgarian - The markets of mainstream national dairy products are oriented to the niche
MPE’s a possibility to trade in EU and to and community determined categories and difficultly may contest with the mass
reach a great number of customers by dairy foods supplied by the other EU dairy plants
competitive prices and specific tastes - Without orienting the dairy export to niche markets and establishment of stable
brand and dairy product types, the export opportunities will be at stake

8. FIRST STEPS
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As seen from the data so far, the dairy sector, in particular, faces serous problems,
which demand rapid, adequate and result oriented approaches.
The primary production within livestock sector is still very adverse, spelling for serious
challenges for dairy producers in terms of modernization of their farming, improving
quality and efficiency of their production, adoption of contemporary and safety
technologies, etc.
 stratify farmers into various groups based on size and sophistication of operations
 reverse-engineer the business model (P&L) of each targeted segment
 identify opportunities based on the different P&L levers from the business model
 offer specific solutions to specific problems in the farmers’ business models
 sell machines to either generate additional revenue or reduce operating expense
 firmly believe that we sell complete solutions to problems and not pieces of hardware
 grow operations with our customers, as they mature and become more sophisticated