We hear that we are relatively food self-sufficient and what we do not have, we can easily buy and import.
We may be self-sufficient in grain and milk, and that’s about it. We import a large part of apples, pork, poultry or vegetables. We have a surplus in beef, because dairy cows have decreased in the Czech Republic, but beef has decreased. I’d rather talk about food security. It’s not just about whether the food is relatively enough, but to meet some quality criteria. And the second criterion of food security is their availability.

I experienced a covid in Moravia. We have a company between Litovlí and Šumperk. This was an area that was completely closed at one point. Even the bread delivery stopped, it was total chaos. We have been able to observe this on a global scale in industry. However, it also affected agriculture, where there was a problem with the transport of certain important commodities. When the conflict in Ukraine is added, it does not seem to me that the ‘import’ of it applies indefinitely.

So trade only works when there is a surplus of something key?
Again, I will set an example for covid. When the veil and respirator containers went through Germany or Hungary, some of the countries did not let go because they needed them themselves. It will not be different with food. At the moment of their shortage, the borders of trade will close. I’m not even surprised. Politicians cannot treat their people differently. It’s actually happening. The Hungarians restricted corn exports, Germany partially reduced meat exports after the start of the war in Ukraine, Spain began to sharply reduce the number of pigs because feed imports from Ukraine were interrupted.

Only in the crisis will it become clear what we really have. Chickens were brought to us illegally from Ukraine, which were repackaged in Poland and then delivered to the European market as a product from Poland. To some extent, I believe it was good quality. The war came and their supplies were interrupted, which means that there is a shortage of them on the market and prices are going up. Apples, on the other hand, are needed too much.

Why? Before the war, the Ukrainians brought apples here in bulk?

Jiří Milek

He graduated from the Faculty of Agriculture of Mendel University in Brno.

He began his career as the director of the food production division of ÚSOVSKO as in Klopina.

In 2006, he was appointed CEO of the joint-stock company ÚSOVSKO and since 2011 Chairman of the Board of Directors.

In 2010, he won the Food Production Manager survey.

From December 2017 to June 2018 he was Minister of Agriculture.

He currently manages the ÚSOVSKO Group, which in 2022 represents 19 agricultural, food, commercial and industrial companies.

No no. Poles circumvented the embargo and exported about a million tons of apples to Russia via Belarus and Serbia. That’s the end of the war – it was no longer possible that the authorities and politicians could not see it. In Poland, about a million tons of extra apples remained from the last harvest. Neither the Germans nor the Austrians will let them into their market.

Eastern countries remain. Just to give you an idea – the Czech consumption of table apples is 140 thousand tons, of which the Czech production is 70 thousand tons, so we import half. Do you know what such overpressure will cause our growers?

I can imagine it, but this is the market, right?
And again – as ever. It is not a common open market, these Polish apples do not go to the German and Austrian markets. Our company produces, among other things, muesli bars. We wanted to sell them in Spar, Austria. But they protect their market. If we opened a plant in Austria and produced them there, they would like to take them. But the imported would have to label them as goods from the East that the locals would not buy.

I hear this often. And also that the Czechs shop mainly by price and do not look at the origin. Why is it like this?
Well, we are poorer than the Germans. Pride is also a bit related to the wallet. You can’t blame someone who takes 20,000 for buying lower quality goods in action. We are within the IZPP (Initiative of Agricultural and Food Enterprises – note red.) commissioned a survey on this topic. These things start to play a role in people with slightly above average earnings. People know that Czech goods are good, but they have to have money for them. And one more thing.

In Germany, the chain will definitely not dare to display Polish goods and say they are German. This is a common issue with us. They buy a pallet of apples from Czech orchards, mark them with the Czech flag and immediately after it they place two unmarked pallets with Polish apples. People may mistakenly think that they are all Czech.

That sounds a bit like market deception. But from that are the control authorities.
To date, the law on significant market power has not been adopted. It is a law that exists in all the old EU countries and regulates the relationship between suppliers and retail chains. The one that is approved by the government today and submitted to the Chamber of Deputies basically does nothing.

Take how many billions retail chains invest in promotions and promotions. They are rolling the Czech market with advertising, investing 22 billion crowns in last year’s annual advertising, compared to the Agrarian Chamber, whose budget for the promotion of Czech products is in the order of millions of crowns. It’s hard to fight.

However, the law on significant market power is awaiting an amendment. Doesn’t that satisfy you?
The law, as approved by the government and submitted to the House, is unacceptable to us. It is supported by the Confederation of Trade and Tourism of the Czech Republic, the Food Chamber and the Association of Private Farmers of the Czech Republic, which hardly supply to the chains. In Poland, for example, the authorities are able to impose a fine of up to ten percent of turnover on the chain. That is palpable. In our country, in the proposed law, it is a few million crowns. The Agrarian Chamber of the Czech Republic, the Agricultural Union of the Czech Republic and agricultural and food enterprises associated in the IZPP do not agree with the law in this form and propose to amend it.

How?
First of all, we want the chains not to require purchases below the cost of production. If I make a chicken for 50 crowns, the chain can’t offer me 45 crowns for it. This happens normally. Every year, even last year, annual negotiations began, with the chains demanding a reduction in basic prices for new deliveries. After big disputes, we defended the price at the same level, but look at the costs today.

We want the methodology to set cost prices and not to sell below them. Our second demand is a ban on selling at sub-purchase prices. The chain buys the goods and sells them in action below the purchase price, thus performing a “bear” service to the one who produces it. Another seller will want to automatically buy the goods at this lower price in action, and this spins for suppliers and manufacturers, which can lead to the end of production.

But these are basic market strategies and mechanisms. If I sell something with a relative loss, I sell something more expensive, so I compensate. And do you really want to reach out to Czechs for discounts at promotions?
This is the third thing we don’t like – excessive discounts. For some assortment, up to 60% of goods are sold in discount promotions, where part of the discount is paid by the supplier. Look, farmers are freelancers. If the carmaker does not financially produce the model, it will stop this production.

And farmers will do the same. That is why we are reducing the production of fruit, pigs and other commodities in the future. One day, their price may shoot up by 100 percent or more. We have seen it recently with oil, we have also seen it in the wheat trade, and a similar scenario awaits pork and apples.

However, further support awaits Czech farmers. Especially the smaller ones, so maybe it won’t be so bad.
Small farmers are great and certainly have their place in the production of special products, but to produce food for 10.5 million people, you need production capacity and animal production. Today, it remained only in larger companies. Logically – it is very expensive. In the old EU countries, which set an example of small-scale farming, more than four million farmers have fallen in the last ten years, 80 percent of them under five hectares.

And the Czechia is trying to go this unpromising way. Nobody gets into agriculture too much. When you look at the farmers who have joined, not all are food producers. Our company bought four family farms in recent years because they had no successors. The generational problem is a serious problem of agriculture.

So there is no interest in agriculture?
It depends on what. Most novice farmers do not want to do farming with intensive livestock production. Large companies that are able to pay employees for shifts can handle this. Young people are willing to do crop production or beef cattle. That they should get up seven days a week, feed the cattle at four o’clock in the morning, and repeat it at six o’clock in the evening? They won’t do it. Check it out in Bavaria. We terribly idealize our agriculture. The current government feeds the ideas, but when the problem comes, they will go away and blame the big food producers.

But even they will get over 800 million more.
As farmers, we thank you for any support and for this extraordinary subsidy, which was aimed primarily at pig farmers and apple growers. Unfortunately, the amount does not cover the loss of breeders and growers from last year. I will give an example: our company manages about 200 ha of fruit orchards. In the last three years, the loss on apples is about 50 million crowns.

In 2021, the loss reached 13 million crowns. So this subsidy will compensate for last year’s loss and will probably amount to 4 million crowns. For us, this represents a result for the past year minus 9 million crowns. This year we estimate the economic result minus 15 million crowns. Because the import of Polish apples will continue. Which leads to the disposal of orchards.

Will it affect the size of your orchards?
This year, our company has destroyed 20 hectares of fruit areas and next year it will be another 30 hectares. Farmers need a stable environment to make their business pay off in the long run. It doesn’t matter if we are talking about animal husbandry or growing fruits and vegetables. Both require planning and investment in the long run. The apple tree will not grow in a year, you will wait five years to harvest the trees.

But let’s go back to wheat, a strategic raw material that will be missing due to the war in Ukraine. The moment we start massive exports from the Czech Republic to other markets, we have a problem. We lack a mechanism for regulation. The state or the EU should be able to buy and sell flexibly in order to regulate the market price, to be able to secure enough wheat in a crisis such as the covid or the war in Ukraine.

Do you think the state should make supplies for worse times?
It is no secret that the Czechia has food reserves in material reserves for only 2 days. It’s a gamble. When something happens, no one will help us. How did the “Arab Spring” begin? Due to food shortages and food prices. Let’s face it – why food is subsidized. Developed countries ensure food security.

At the same time, food security is downplayed and underestimated in our country, but also in the EU. Given the current pressure to introduce a Green Deal in the EU, it is necessary to emphasize that no impact studies have been prepared or published for either the Czechia or the EU. That is why we call on the Czech and EU governments to carry out impact studies. Without them, it is a gambling with food security.