A payout for Pag
Supermarket retailing Croatian dairy products. Credit: Zlatko Čonkaš
Croatia’s dairy sector has restructured since the country joined the European Union (EU) in 2013. With a rich tradition in dairy production, Croatia’s primary dairy sector is dominated by small-scale or family-owned farms. And while this has ensured a regular flow of quality milk, the dairy manufacturing sector has struggled to renew its product range and maintain production volumes.
As a result, the Croatian government approved a €592.5 million programme in February 2024 to boost the local dairy sector until 2030, with much of the money drawn from EU funds.
This will be combined with European Commission funding approved in May 2023 of €30.9 million, partly supporting dairy cow breeders in milk production. A Croatian ministry of agriculture communiqué said the programme aims to fortify the country’s agricultural backbone.
“Despite market disruptions, we continue to invest heavily in and support the dairy sector, and engage in dialogue with all stakeholders to take all available measures to ensure not only the sustainability but also the increase in value and competitiveness of the Croatian dairy sector,” Zdravko Tušek, state secretary at Croatia’s ministry of agriculture, told Dairy Industries International.
Sheep and goat stability
Tušek noted the enduring stability of sheep and goat sector production in 2023 despite the market challenges caused by global events, saying, “I am pleased to observe that throughout 2023, the enduring stability of sheep and goat sector production persisted despite the adversities posed by the Covid pandemic and the Russian aggression on Ukraine, demonstrating the resilience of sheep and goat farming as one of the most robust sectors in livestock production.” This includes Pag cottage cheese made from sheep’s milk (in Croatian, Paška Skuta), Dalmatian sheep cheese (Dalmatinski Ovčji Sir), Pag goat cheese (Paški Kozji Sir), Istrian goat cheese (Istarski Kozji Sir).
However, dairy production from cattle has been less robust. Commenting on the current domestic livestock industry and Croatia’s 10 years of EU membership, as well as trends in market dynamics from 2013 to 2023, Branko Bobetić, the director of Croatia’s livestock and poultry breeders and meat and dairy product producers association Croatiastočar, told DII: “Unfortunately, the most significant decline in production was in the dairy cattle sector, as evidenced by a sharp decrease in the number of dairy cows by 35 per cent compared to the year before joining the European Union. The number of milk suppliers has decreased, leading to the self-sufficiency rate in this sector dropping to approximately 45 per cent in 2023, compared to 65 per cent in 2013,” compared to an average EU-wide self-sufficiency dairy sector rate over the past two years of 114 per cent. Historically, the highest milk purchase in Croatia was in 2009, when 675,000 tonnes of cow’s milk were purchased, and self-sufficiency was at the level of 82 per cent,” he recalls.
Livestock investment
The country began investing in renewing its livestock in 2003, Bobetić says, reaching its peak in 2008, hence the record-breaking year of 2009. Investments were made in the breeding of replacement heifers, with imports from both Europe and Canada. Even today, he said, there are farms with Canadian heifer genetics.
“In 2008, we imported around 8,000 replacement heifers, and they immediately began producing milk. Unfortunately, later everything collapsed, and Croatia found itself in an ignominious position. The number of farms shutting down has significantly decreased. In Europe, for example, over the past 10 years, the number of dairy farmers has halved, and the number of cows has decreased by about one to two per cent. However, milk production per cow is increasing, which is not the case in Croatia,” Bobetić adds.
In the first nine months of 2023, total milk purchases in Croatia fell seven per cent year-on-year, with the number of dairy cows down five per cent year-on-year. “Only 320 milk suppliers in 2023 maintained the number of dairy cows, but milk purchase per cow is declining by two to three per cent. The remaining 2,500 suppliers delivered about 10 per cent less milk and reduced the number of dairy cows by four per cent. Since 2018, purchases have decreased by approximately 15 per cent, and the number of cows is down by nearly 20 per cent,” says Bobetić. So, Croatia needs the new government measures, which would be very encouraging if implemented correctly, he adds.
The development programme has three objectives: increasing the number of cows, sheep, and goats in milk production, increasing milk production productivity, and ensuring available and sufficient processing capacities.
“Support will be provided to renew the production potential of the cow’s milk production sector by 20 per cent, and sheep and goat milk by 30 per cent. The dairy sector development programme aims to increase the economic potential of Croatian dairy throughout the entire chain, but a majority of the funds are directed towards strengthening primary milk production,” Tušek adds.
The key local market players in Croatia are Varaždin-based Vindija, Zagreb-based Dukat, and Zagreb-based Meggle Croatia, which make cheese, yogurt, milk and more. Vindija holds a ‘Proven Quality Croatia’ certification for 62 milk and dairy lines, including Dokazana Kvaliteta Hrvatska. Among these are brands Z Bregov fresh and goat milk, Vindija hard cheeses and fermented lines and Protein Skyr yogurts. This national quality assurance system offers a seal of excellence to assure quality, safety and exclusively Croatian origin.
As for trade, the agriculture ministry says there is a deficit, with milk and milk products worth €393.5 million were imported into Croatia in December 2023, while exports amounted to €106.6 million. The most important export products were cheeses and curds, buttermilk, yogurt, sour milk, and kefir while the most significant imports were cheeses and curds, and milk and cream.
Neighbours Slovenia, Bosnia & Herzegovina and Serbia remain pivotal export destinations, according to Croatian Chamber of Economy officials. Among them, Slovenia and Bosnia & Herzegovina hold a dominant share, illustrating Croatia’s regional export focus, while Italy, Germany and Austria stand out as promising destinations for increased exports, says a note from the chamber.
UK-based market research company Euromonitor International says Croatia’s 3.8 million people market recorded a slight dairy retail revenue growth from €900 million in 2022 to €908.9 million in 2023, including an increase in plant-based dairy sales and products.
Pag cheese
Nevertheless, the Croatia’s dairy reputation remains solidified by its renowned sheep milk cheese from the Dalmatian island of Pag. Crafted by local artisans, this cheese with its tangy flavour, special smell and dense texture, is a staple of Croatian cuisine.
Pag cheese was awarded a European Union Protected Designation of Origin in 2019, determining that this cheese can only be made on the island of Pag, using milk from Pag sheep and salt from the island.
The largest and oldest factory of this dairy product is Paška Sirana, whose marketing manager, Martina Pernar Škunca, explained produces 10 types of cheese using sheep’s milk from Pag and cow’s milk supplied from the continental part of Croatia. They produce around 600 tonnes of cheese annually, including 100 tonnes of Pag cheese.
“We have our flock of around 3,000 sheep, and over 20 people working in the livestock sector at four locations on the island. From our production, we get about 15 per cent of the milk, and we also have around a hundred cooperatives from the island who have their smaller flocks and sell milk to us,” she said. She added that the number of dairy sheep farms on the island is declining, however, because it is a demanding job, and incomes are low. Pernar Škunca, who is also the president of the Association of Pag Cheese Producers, said just five years ago there were more than 130 supplier cooperatives.
Pag cheese owes its excellence to the sheep’s resilience and adaptability. “Weighing 24-35kg, these sheep produce low milk yields, maxing out at 120kg per lactation from January to June. The distinctive agroclimatic conditions and aromatic Mediterranean herbs contribute to the exceptional flavour of sheep products,” says Pernar Škunca, highlighting that 10 per cent of Pag cheese is exported, particularly to the US, while enjoying popularity also in European speciality stores.
Such quality and originality will be needed as Croatia aims to revive its dairy industry through the new major government redevelopment programme.
