How much does the price of milk increase on the way from the farm to the shelf in supermarkets?

The price of milk from farms to supermarket shelves increases more than three and a half times. Owners of dairies claim that cheese and yogurt are sold by large retail chains with a markup of 80 to 100%. A check by BNT team revealed that fresh milk in Spain is sold for less than 1 euro, while in Bulgaria, it is twice as expensive. This is against the backdrop of Bulgaria's average wage being half that of Spain's.

In a small grocery store in central Sofia, a cup of yogurt with 4.5% fat from a well-known producer costs 1.58 BGN, while the same brand with 3.6% fat is 1.50 BGN, and that with 2% fat costs 1.38 BGN. In two major supermarket chains, the same brand with 3.6% fat is sold for 1.99 BGN, which is 32.67% more expensive than in the small shop. The 2% fat variant is 1.79 BGN, nearly 30% more expensive, and the 4.5% fat variant costs 2.15 BGN, over 36% more expensive than in the small shop.

In the context of these price markups, the manager of a large retail chain, Dobromir Stoyanov, explained that "the so-called markup includes the large and convenient store, which must be built and maintained"'

"Let's face it, what's behind this so-called 'mark-up' that sounds very scary. So, this markup includes the big and convenient store, it has to be built, it has to be maintained," explained Dobromir Stoyanov, corporate communications manager at a large retail chain.

However, the large chains keep their markups secret. Even suppliers have clauses in their contracts that prohibit them from disclosing the wholesale prices of products. According to Dimitar Zorov, annual trade relations between producers and chains are deteriorating.

• Second boycott on large retail chains over high food prices

"We estimate the net price at which the producer delivers and the price the consumer pays. According to data from the Ministry of Health and the former Minister Vatev, who worked with the National Revenue Agency, markups range from 70% to 100%. I can say that some more reliable Bulgarian retail chain owners work with 50% or more markups," said Dimitar Zorov, chairman of the Bulgarian Dairy Processors Association.

These markups are without delivery costs, as the practice is for producers to deliver their products to the retail chain’s ramp at their own expense.

"In the smallest stores, there is also an intermediary – wholesalers, so another party gets involved. But in these smallest stores, as you’ve observed, they have much lower markups," commented Dimitar Zorov.

Against the backdrop of claims about markups, the response from the large retail chains is that their prices this January were 1 percent lower than prices in January of the previous year.

"The proof is in the numbers. When the numbers speak, we all remain silent. Over 50% of our sales are on promotion," said Dobromir Stoyanov, the corporate communications manager at a major retail chain.

We are comparing the price of fresh milk in Spain and Bulgaria. Both countries have VAT – in the Iberian Peninsula, it is 21%, while in Bulgaria, it is 20%. Milk in Spain costs just under 1 euro, while in Bulgaria, it is twice as expensive at 1.94 euros. The purchase price in Spain from the farm is 46 euro cents.

"Currently, the price of milk from farms in Bulgaria, which we can compare to the Spanish and German farms, is around 1.20 - 1.30," explained Dimitar Zorov.

However, the situation in smaller farms is quite different.

"Currently at 0.95 BGN and they have warned that they will start to reduce it. This usually happens in April or May, when the grass is green. But surprisingly, this year they warned earlier that they would begin lowering the price," said farmer Irina Sasheva.

Irina Sasheva and her family have been raising cows for milk production for 30 years. They used to have hundreds of animals, but now they only have 17 because they cannot sustain themselves with the low purchase price. Boyko Sinapov raises 700 cows, but only for meat production, not for milk, again due to the purchase price.

"Currently, we are observing a price range of 0.80 BGN to 1 BGN at most for raw milk. The price of raw cow's milk should be at least 1.50 BGN," said Boyko Sinapov, the chairman of the Bulgarian United Livestock Breeders Association.

The purchase price of milk in Bulgaria is higher than in other European countries because we produce less and less. Additionally, there is a significant difference in subsidies.

"The difference between Bulgaria and Romania, since we are neighbours, is nearly double. In Bulgaria, large farms receive 350 euros per year per livestock head. In Romania, it's 740 euros," pointed out Dimitar Zorov.

As a result of markups by retail chains and years of policy errors, Bulgaria, the country with the lowest incomes in the EU, ends up purchasing some of the most expensive food in the bloc.