High production costs from increased taxes and raw material prices are favoring the sale of imported goods. Albanian productions have lost their competitiveness and are being replaced in the market by imported goods. 

Most affected are the producers of dairy, beer and alcoholic beverages. Business associations call for intervention by the state, otherwise the complete dominance of foreign products in supermarkets is at risk. 

Weight of local production in the market has been significantly reduced for months, with some local products being rapidly replaced by imports, due to the higher selling price. 

Effects of increased costs have aggravated the difficult situation in which milk processors and brewers have been for months. Purchasing power has fallen and the pressure of import products is increasing daily. 

Associations repeat the concern that these sectors will go towards an irreversible decline and their disappearance. According to them, there are two reasons for the loss of competitiveness of domestic production, the high costs from the price of energy, raw materials, the increase in taxes and the lack of subsidies. 

Dairy sector has increased costs since January 1, 2022, when the removal of the creditable VAT scheme began to be implemented, the gas excise that began to be applied from July 1, 2022, and the low subsidies for livestock farmers compared to the region that are being given through national scheme. 

As for beer producers, the doubling of the excise duty from January 1, 2023 has not only replaced Albanian production with imports, but has increased the risk of bankruptcy of the industry. 

The Association of the Milk Processing Industry raises concern that imported products in the milk sector and its by-products have recently increased and are more present on the shelves of markets and supermarkets. 

In the months of January and February 2023, imports increased 9% more compared to the same period last year, according to Customs data. In the months of January-February, 46% of milk imports are headed by Italy, 30% by Serbia, 10% by Kosovo and the rest by other countries. 

The upward trend of imports started already in 2022. The total imports of 2022 increased about 2% more than in 2021. 

The executive director of the association, Mr. Donjaldo Hoxha claimed for "Monitor" that the loss of competitiveness of domestic products compared to imported ones has come from the high costs of the sector. Hoxha emphasizes that compared to the region or EU countries, the price of milk as a raw material is 45% higher, due to the lack of subsidies to the farmer. 

High costs are also influenced by high fuel prices and informality. 

"Currently, the milk processing sector finds it very difficult and almost impossible to be competitive with imported products, which recently have an increased presence on the shelves of markets and supermarkets in the country. Unfortunately, the costs of the milk processing sector in our country are much higher than the costs of producing products that come from imports and mainly from the region. 

Specifically, if we do a relevant analysis, it turns out that, first, our country has the highest price of fresh milk that is purchased from livestock farmers for processing. Currently, the price is 35-45% higher compared to the price of milk purchased by farmers in the region and the EU. 

Secondly, our country has the lowest subsidy in the region in relation to livestock farmers. This makes the costs of the region/EU livestock farmers lower and automatically, the milk products and milk by-products produced in the region and the EU countries have production costs many times lower than the production of the processing sector of milk in our country. 

Thirdly, the milk processing sector also has higher costs in: a. the price of oil b. the price of electricity c. the price of gas. 

Fourth, another element that damages the local milk processing sector in relation to imported products is the very high informality in this sector in our country", said Hoxha. 

(Source: Monitor)