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Wednesday, January 17, 2001
Falling demand for beef starts to claim victims in meat processing business
By Staci Semrad
Past puddles of blood, the feet of dead pigs protrude from metal bins beside workers carving the carcasses of animals.
At the city's Kliment meat processing plant, workers and their machines roll, turn and rotate -- producing pork for the nation's dinner tables.
But Kliment's bustle is the exception. Other national meat companies -- especially beef processors -- are struggling to keep production lines alive.
In the last two years, five of the country's 21 major meat processors have reached the brink of bankruptcy, slashing hundreds of jobs, according to the Agriculture Ministry.
Kliment owner Emil Kliment says the meat industry is facing a crisis.
The struggle stems from decreased demand. Beef consumption has plummeted more than 50 percent since the end of communist rule in 1989.
The industry has suffered additional blows in recent months due to Europe-wide fears of bovine spongiform encephelopathy (BSE), or mad cow disease, even though no occurrences have been found among Czech cattle.
Some meat processors on the skids may be rescued by Italian companies currently eyeing local beef because of the country's BSE-free record.
The Italian Embassy has been in touch with the Agriculture Ministry to discuss increased trade, and negotiations are under way between Italian companies and four Czech meat processors that are certified to sell in the European Union.
One reason for the Italians' interest is that meat prices are lower here than in EU countries. In addition, the Italian government recently banned beef imports from France after BSE was detected in cows there.
Two Czech companies on the brink of bankruptcy -- Masokombinat Klatovy and Masokombinat Martinov -- are among those being studied for possible increased trade with Italy.
Long-term troubles
But other meat processors are falling off of the chopping block.
In the past two years the meat processors Masospol Pisnice, Bilbo and Satrapa have declared bankruptcy, according to Agriculture Ministry spokesman Hugo Roldan.
Kliment says the processors' problems with falling demand are exacerbated by supermarket chains that pay late and offer to buy at prices below production costs.
To keep his company afloat, Kliment cut 20 of his 360 employees in November. The goal was to improve efficiency. He's also fought to keep his side business -- a chain of 20 delicatessens -- in business despite competition from big supermarkets.
Roldan said although mad cow disease has hurt the meat industry, the problems began long before the BSE crisis surfaced.
Under communism, prices were about equal for many types of meat, despite vast differences in supplies of pork, beef and poultry. But after the Velvet Revolution, prices began to rise to reflect production costs. As a result, Roldan said, beef prices climbed and demand fell, forcing processors to adjust.
"Many of these meat processors were designed and built up at the end of the 1980s during the end of the communist era, when demand for meat was completely different than today," Roldan said.
In 1989, Czechs consumed 483 tons of beef. A decade later, the annual consumption was just 233 tons.
"These bankruptcies are a painful process, but they are a part of the restructuring of the agricultural system," Roldan said.
Sunny side
But there are bright spots in the national meat industry. For example, pork consumption has remained stable in the past decade while poultry consumption increased to 281 tons in 1999, from 180 tons a decade earlier.
Foreign markets are opening up, too.
Kostelecke uzeniny in Kostelec u Jihlavy plans to build a new plant and add 450 jobs by 2002 to handle an anticipated increase in EU exports.
"We want to be ready for the European Union and want to export the meat as well as meat products," said Kostelecke uzeniny managing director Jiri Bambula.
Roldan thinks any deals between Italian and Czech companies would be fruitful. Not only would such deals boost domestic exports, but the Italian investment could also hike confidence.
"It could be a good sign to our Czech consumers that our beef is safe to eat," Roldan said.
-- Petra Cermakova contributed to this report.
Staci Semrad may be reached at ssemrad@praguepost.cz
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