Actualization of Export Strategy Manufacture of Food Products

Transcription

1 REPUBLIC OF BULGARIA Bulgarian Small and Medium Enterprises Promotion Agency PROJECT BG161РО , PROMOTION OF THE INTERNATIONALIZATION OF THE BULGARIAN ENTERPRISES Проект BG161РО , НАСЪРЧАВАНЕ НА ИНТЕРНАЦИОНАЛИЗАЦИЯТА НА БЪЛГАРСКИТЕ ПРЕДПРИЯТИЯ This project is financed by the European fund for regional development through an Operational programme Development of the competitiveness of the Bulgarian economy Този проект е получил финансиране от Европейския фонд за регионално развитие чрез Оперативна програма Развитие на конкурентоспособността на българската икономика Actualization of Export Strategy Food Products February 2014 This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority

2 LIST OF ABBREVIATIONS EU European Union BSMEPA Bulgarian Small and Medium Enterprises Promotion Agency MAF Ministry of Agriculture and Food MEE Ministry of Economy and Energy MRD Ministry of Regional Development SME Small and Medium-size Enterprises ITC International Trade Centre NCEA National Classification of Economic Activities NSI National Statistical Institute OP Operational programme ECO Economic and commercial offices This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 2

3 TABLE OF CONTENTS INTRODUCTION APPROACH FOR DEVELOPING THE EXPORT STRATEGY MAIN CONCLUSIONS FROM THE ANALYSIS OF THE CURRENT STATE SWOT AND LOED ANALYSIS OF THE EXPORT PROCESS OF SMEs IN SECTOR MANUFACTURE OF FOOD PRODUCTS OBJECTIVES STRATEGY FOR PROMOTION OF EXPORT OF SMEs IN THE SECTOR This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 3

4 INTRODUCTION The export strategy of sector Food Products is developed under Project No. BG161РО Promoting the internationalization of the Bulgarian enterprises, Priority Axis 4 Strengthening the international market positions of Bulgarian economy of "Development of the Competitiveness of the Bulgarian Economy", pursuant to contract BG-161PO C00001 for providing direct grants under which the Bulgarian Small and Medium Enterprises Promotion Agency (BSMEPA) is an institutional beneficiary. The goal of the Export Strategy for sector Food Products is to provide support to the Bulgarian micro, small and medium-sized enterprises in the sector to enhance their competitiveness, degree of internationalization and entering or expanding the market positions of the Bulgarian products and particularly of these with higher value added. The Bulgarian state, represented by BSMEPA, MEE and other state institutions has identified the SME sector as particularly sensitive and at the same time as having crucial importance for economic life, deserving special attention. The diversity in the development of different economic sectors and the place of SMEs therein, as well as the national priorities related to the promotion of national exports, require the development of export strategies for particular sectors, one of them being the sector of Food Products. Focusing of the support and defining of precise benchmarks for state intervening through its institutions, on the one hand, and providing options for development to other participants in the process, on the other, will strengthen in a positive way the planning aspect of state activities and will at the end improve the performance of the sector. The successful implementation of the Export Strategy is expected to result in improvement of the process of going international and of the active expanding and strengthening of market positions of Bulgarian SMEs producing foods. In developing the Export Strategy, the "Methodology for Strategic Planning" is taken into account prepared by the Council for Administrative Reform to the Council of Ministers of the Republic of Bulgaria. This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 4

5 1. APPROACH FOR DEVELOPING THE EXPORT STRATEGY The Export Strategy is a strategic document defining the medium-term goals and priorities of the export development of SMEs in sector Food Products. It is developed on the basis of the strategic planning approach, the skillful implementation of which has the following advantages: Creates an understanding among stakeholders on the trends and prospects for the future. Establishes a common vision and consensus among stakeholders, by coordinating different initiatives in the selected targets. Identifies already undertaken or planned projects and actions. Strengthens partnership between government, business and other parties to solve complex problems. In developing such a strategic document, it is of crucial importance to formulate properly the "owner" of the strategy, i.e. the institution or institutions which will be responsible for the overall implementation of the strategic document as well as for the different stages of strategic planning. In general, the development of strategic documents includes the following stages: Assignment, Preparation, Development, Coordination, Approval, Implementation, Evaluation and Updating. Each of these stages contains specific activities, some of which, such as assignment, preparation, development, coordination, approval and, at a later period, updating, are part of the project implementation under the contract mentioned above. Therefore, the principal owner of the export strategy is the Bulgarian Small and Medium Enterprises Promotion Agency (BSMEPA). For this reason, the goals, measures and actions set in the strategic document must first help BSMEPA improve the planning and implementation of activities related to the support of exports of SMEs in sector Food Products. This formal logic does not contradict to the fact that a significant number of institutions, businesses and even the population are involved as stakeholders and they might be influenced by means of different mechanisms, for example, the state institutions through the forms of coordination of strategic documents of such rank, and the branch associations and businesses by providing incentives to increase their export potential. It is of extreme importance for SMEs in the sector of Food Products to be able to see a clear and predictable export supporting state policy, which, though in the medium run, will allow them to decide whether to benefit or not from the created opportunities. The following elements of the strategic planning are included in the analysis: Identification of the stakeholders Analysis of the environment SWOT analysis Goal setting Selection of an alternative a development strategy This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 5

6 INFORMATION SOURCES The following main information sources have been used in developing the export strategy: - National Statistical Institute - Information provided by the BSMEPA - Information from the MEE - EUROSTAT - International Trade Center - Published information related to international forums and meetings - Official electronic information sources - Information published by branch associations in the sector - Information of the Bulgarian Industrial Association and the Bulgarian Chamber of Commerce and Industry, and their regional divisions - Information from a survey conducted in the period 31 October to 28 November 2011 with the senior management of 1 micro, 11 small and 8 medium-sized (total of 20) enterprises operating in the sector, and from a focus group. Information is processed with the will for maximum objectivity of the findings. In many cases, the analyzed information applies to the sector as a whole, i.e. the information covers both SMEs and large enterprises, based on the assumption that if a Bulgarian company has been successful on certain markets, the same could be expected for another company as well, incl. from the group of SMEs. These specifics are explicitly emphasized during the analysis. STRUCTURE OF THE EXPORT STRATEGY FOR SECTOR MANUFACTURE OF FOOD PRODUCTS The structure of the Export Strategy for sector Food Products is based on the strategic planning approach which sets the general parameters of the strategic document. At the same time, a study was made of the structure of other institutional strategic documents, and they were estimated with regard to the following criteria: - providing opportunity for relatively easy access to the document through understandable and logical structuring of different parts; - presenting the content in an attractive and easy-to-understand manner accessible to nonspecialists as well; - providing information thematically, i.e. structuring the material in a way that allows indepth penetration of problems and analyses only if desired by the reader. The above mentioned criteria were met by several of the studied strategies and they contained two clearly distinguished separate parts, namely: This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 6

7 1. A main document, in which according to the above described technology of strategic planning the separate chapters are defined. 2. Appendices that contain the complete text of the analysis, including conclusions, transferred to the main document. This approach was chosen in structuring the Export Strategy for sector Food Products. Following consultation with stakeholders, the initial approach was slightly altered, as findings and conclusions in the main document were supplemented with specific data and visualized with graphs and diagrams, thus relieving users who do not intend to go in depth of the analyses included in the Appendices. 2. MAIN CONCLUSIONS FROM THE ANALYSIS OF THE CURRENT STATE This part contains the conclusions of different analyses, included in Analysis of the environment, one of the main steps in the technology of strategic planning. The conclusions and the analyses themselves are structured in 6 parts, namely: STATE AND DEVELOPMENT OF THE SECTOR IN BULGARIA EXPORT ORIENTATION OF THE SECTOR GOODS WITH EXPORT ADVANTAGES AND POTENTIAL COMPETITIVENESS OF THE EXPORT OF GOODS ON FOREIGN MARKETS EXPORT PRIORITY PRODUCT GROUPS AND MAIN MARKETS BARRIERS TO THE INTERNATIONALIZATION OF SMALL AND MEDIUM ENTERPRISES AND MEASURES FOR THEIR OVERCOMING Conclusions are clearly structured according to the scope of the analysis, as first are presented those valid for the whole sector, incl. large (according to the classification) enterprises, and second come the conclusions regarding small and medium-sized enterprises in the sector. This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 7

8 STATE AND DEVELOPMENT OF THE SECTOR IN BULGARIA Sector Food Products, general The dynamics of production and turnover of enterprises in the sector, measured the by production and turnover indices, shows positive trends for the sector in the whole period Table 1. Indices of industrial production and turnover on domestic market * Industrial production indices Manufacturing Manufacture of Food Products Industrial turnover indices on domestic market Manufacturing Manufacture of Food Products Note: December of the year, 2005=100; *Preliminary data Source: NSI Regional distribution of enterprises and employees in sector Food Products is uneven. The biggest concentration of companies and employees is in the South-Western region, followed by South Central region, and the lowest level is observed in the North- Western region. This location is closely related to the markets of manufactured products. Figure 1. Regional distribution of enterprises in sector Food Products Source: Amadeus database, MEE, 2011 This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 8

9 SMEs in sector Food Products Sector Food Products is a leader in terms of number of SMEs in The number of SMEs marked an increase in 2012 against 2011 by 0,8% (contrary to the average rate in the priority sectors -2,9%). This development implies weaker effects of the crisis on the production of foods. The sector provides 21% of employment in SMEs and given the relatively small decrease in the number of employed in 2012 compared to 2011 (- 3,18%), it can be concluded that it has significant national importance for the stabilization of the labour market and particularly for the reduction of unemployment in the country. In inner-sector aspect, the sub-sectors Processing and preserving of meat and production of meat products, excluding ready dishes and bakery and farinaceous products generate highest employment resp. 20.5% and 35.4%, and highest value added resp. 20% and 18%. Sub-sector Processing and preserving of meat and production of meat products, excluding ready dishes generates the highest turnover of 26.5%, followed by sub-sector grain mill products, starches and starch products 12,9%. Due to their nature, these sub-sectors are considerable in volume and have their own market characteristics. The conducted survey and the analysis of the financial situation of SMEs with export potential show that these enterprises have relatively good development and they are in generally good financial condition. These conditions suggest that the export orientation stems from good company development and it is also an opportunity to weaken the negative effects from decreased domestic demand. Due to the high-turnover character of activities in food production, the availability of own resources creates better financial comfort for the analyzed enterprises. In 2012, SMEs in the sector provided about 31% of turnover and 22% of value added generated by SMEs in manufacturing, as both indicators are higher compared to This means that sector Food Products is less influenced by the crisis in comparison with other sectors. The higher percentage of turnover compared to that of value added confirms the thesis that food production does not contain a high innovation component. The above statement is further confirmed by the fact that in 2012 labour productivity in SMEs in the sector (BGN 14,343) is similar to labour productivity in manufacturing (BGN 13,793), yet it is far lower than that in the most productive sector pharmaceuticals (BGN 27,747), where components like research and innovation are most developed. The sector has highly qualified working force, possessing the knowledge and skills to apply traditional good practices in production. This estimation results from the relatively low priority of measures for improving the qualification of personnel pointed out in the company survey and the opinions of experts in food production shared during the discussions in the focus groups. This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 9

10 Preserved nature and therefore good quality of raw materials are emphasized by experts as national advantages, though, at the same time, stressing on the lately established trend of Bulgarian agricultural products being supplanted by imports from neighboring countries. This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 10

11 No. sector Bulgarian export food products beverages textiles and textile articles, except apparel wearing apparel, including leather, leather rubber and plastics chemicals and pharmaceuticals Production of non-metallic products and minerals machinery, equipment and household appliances EXPORT ORIENTATION OF THE SECTOR Table 2. Export dynamics by sectors, and Q Q thous.bgn thous.bgn thous.bgn thous.bgn thous.bgn thous.bgn thous.bgn thous.bgn thous.bgn thous.bgn thous.bgn thous.bgn thous.bgn This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the European Regional Development. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 11

12 No. sector Bulgarian export medical, precision and optical apparatus and instruments office machinery and computers and computers electrical machinery and apparatus wood and cork, except furniture pulp, paper and paperboard and articles furniture Publishing, printing, reproduction motor vehicles other than cars Fabricated metal products, except machinery and equipment Q This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the European Regional Development. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 12

13 No. Bulgarian sector export Q radio, television 18 and communication equipment Total, 18 sectors BG exports Structure (Share of the sector in the national exports, %) 1 food products beverages textiles and textile articles, except apparel 4 wearing apparel, including leather, leather 5 rubber and plastics 6 chemicals and pharmaceuticals 7 Production of non-metallic products and minerals This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the European Regional Development. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 13

14 No. sector Bulgarian export machinery, equipment and household appliances medical, precision and optical apparatus and instruments office machinery and computers and computers electrical machinery and apparatus wood and cork, except furniture pulp, paper and paperboard and articles furniture Publishing, printing, reproduction motor vehicles other than cars Q This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the European Regional Development. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 14

15 No. Bulgarian sector export Q Fabricated metal 17 products, except machinery and equipment 18 radio, television and communication equipment Total, 18 sectors BG exports Base index, 2001=100 1 food products beverages textiles and textile articles, except apparel 4 wearing apparel, including leather, leather 5 rubber and plastics 6 chemicals and pharmaceuticals This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the European Regional Development. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 15

16 No. sector Bulgarian export Production of non-metallic products and minerals machinery, equipment and household appliances medical, precision and optical apparatus and instruments office machinery and computers and computers electrical machinery and apparatus wood and cork, except furniture pulp, paper and paperboard and articles furniture Publishing, printing, reproduction Q This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the European Regional Development. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 16

17 No. sector Bulgarian export Q motor vehicles other than cars Fabricated metal products, except machinery and equipment radio, television and communication equipment Total, 18 sectors BG exports Source: ITC and own calculations This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the European Regional Development. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 17

18 Sector Food Products, general Sector Food Products ranked first as per exports in Data of the International Trade Center (ITC) show that by its share of 9.13% in total exports, this is the best positioned sector in manufacturing. In dynamics, the reported increase of nearly 3.5% (from 5.78% to 9.13%) in the share of the sector in national exports in the period shows clearly that the export potential of the sector is significant. The exports values in Food Products increase at a higher growth rate than the average growth rate in total exports of Bulgaria the exports of the sector increased almost six times (575%) in 2012 compared to 2001, while national exports increased 3.6 times (364%) for the same period. SMEs in sector Food Products The share of SMEs in the export of sector Food Products is high 60% in 2009, 42% in 2010, 67% in 2011 and 34% in The registered trend in the share of SMEs in exports of sector Food Products in 2012 compared to 2011, given the general increase in exports which is due to large enterprises, allows concluding that small and medium enterprises are more severely affected by the global financial and economic crisis. The above conclusion is confirmed also by the results of the survey conducted in 2011, according to which companies with decreased turnover in comparison with 2007 have increased in number in the last years, as in 2010 this applies to 8 firms, or 40% of the surveyed sample. Registered decrease of the share of exports from SMEs in 2012 compared with 2011 gives grounds to conclude that SMEs succeed to overcome the negatives effects associated with the crisis. Within SMEs in the sector, the greatest share in exports belongs to the group of Manufacture of grain mill products, starches and starch products, the exports of which increased by nearly 3% in 2012 compared to 2011 and its share in total exports of the sector raised from 16% in 2009 to 20% in 2011 and to 23% in This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 18

19 Table 3. Export performance of SMEs in the manufacturing of chemical products and the manufacture of pharmaceutical products Export (BGN thousand) Structure of exports Change in exports (%) Exports per 1 employed (BGN) Enterprises / / / Food production Processing and preserving of meat and production of meat products, excl. Prepared dishes Processing and preserving of fish, crustaceans and mollusks, excl. Prepared dishes Processing and preserving of fruit and vegetables, excl. Prepared dishes % 100% 100% 100% 92.4% 152.4% 88.4% % 17.3% 11.0% 13.5% 91.1% 97.2% 108.3% % 0.7% 1.5% 2.2% 45.0% 326.7% 123.7% % 19.1% 15.4% 19.2% 83.3% 123.0% 110.0% vegetable and % 27.2% 32.6% 17.0% 147.8% 182.8% 46.0% animal oils and fats dairy products % 8.2% 9.2% 11.3% 75.7% 169.4% 109.2% grain mill products, starches and starch products bakery and farinaceous products other food products % 15.0% 19.8% 23.1% 86.9% 201.3% 102.9% % 1.6% 1.8% 4.0% 40.6% 171.8% 194.6% % 8.9% 4.9% 6.5% 103.1% 84.5% 117.2% Animal feed preparations % 2.0% 3.7% 3.3% 35.3% 287.1% 79.0% Source: NSI and own calculations This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 19

20 In terms of export value per 1 employed, SMEs in sector Food Products rank 10 th among all analyzed sectors 1, which is due to the big number of employed in enterprises working entirely for the domestic market. The presence of export oriented SMEs is confirmed by the conducted survey. Results show that one-fifth of the companies export over 60% of their production. Accounting for the fact that the sample includes only enterprises which make exports or have stated their will to do so, it can be concluded that the total number of SMEs with real export activity is relatively small. Companies in the sample export directly, without using trading or distribution organizations, or creating joint trading companies, etc. GOODS WITH EXPORT ADVANTAGES AND POTENTIAL Sector Food Products, general Product groups manufactured and exported by sector Food Products are extremely numerous. For this reason, goods and services with export advantages and export potential are selected on the basis of two main criteria, namely: highest share in the export of the relative product group combined with a trend of increase over the examined period. These criteria were applied for the sector as a whole, since no official statistical information exists on SMEs. Applying the selected criteria to data of the International Trade Center allowed identifying 15 product groups with export advantages and potential, as follows: Bread, biscuits, wafers, cakes and pastries Meat & edible offal of poultry meat Cane or beet sugar and chemically pure sucrose, in solid form Safflower, sunflower/cotton-seed oil & fractions Cheese and curd Preserved fruits nes Chocolate and other food preparations containing cocoa Sugars, nes, incl. chemically pure lactose etc; artificial honey; caramel Animal feed preparations, nes 1 In the framework of Project No. BG161РО Promoting the internationalization of the Bulgarian enterprises, export strategies are developed for other 17 sectors in Manufacturing considered to have export potential. The state, development and export orientation of sector Food Products is compared (where appropriate) to data for the rest of the sectors, so as to outline their positions and export potential. This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 20

21 Prepared or preserved vegetables nes (excl. frozen) Natural honey Frozen fruits & nuts Beet-pulp, bagasse and brewing or distilling dregs and waste Oil-cake nes Frozen vegetables The selection of product groups confirms the findings of the Ministry of Economy and Energy, Economic Policy Directorate, in outlining the export profile of the sector 2. The product groups meet, bread and bead products, sunflower oil, sugar and sugar products, cheese and curd, preserved vegetables and fruits are identified as the main products exported by sector food products. The largest shares in exports of the sector in 2012 are contributed by the groups of Bread, biscuits, wafers, cakes and pastries and Meat & edible offal of poultry meat, i.e. predominantly goods with low value added. Figure 2. Exports of food products from Bulgaria in 2012 (thousand Euro) Source: International Trade Center 2 This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 21

22 Figure 3. Exports of food products from Bulgaria in Q1 of 2013 (thousand Euro) Source: International Trade Center In the first quarter of 2013 the highest share in the country's exports has the product group bread, biscuits, waffles, cakes and sweets, followed by chicken and poultry offal, and ready-for-use animal food. As seen from the table below, Bulgaria s position in world exports in Q1 of 2013 improved for every one of these product groups. The main findings of the analysis of Bulgaria s position in world exports, export dynamics, and Bulgaria s position in terms of export value by selected product groups in the sector, are summarized in the following table: This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 22

23 Table 4. Export of Bulgaria by product groups for the period (thous. EUR) Product group Bread, biscuits, wafers, cakes and pastries Meat & edible offal of poltry meat Cane or beet sugar and chemically pure sucrose, in solid form Safflower, sunflower/cotton-seed oil & fractions Cheese and curd Preserved fruits nes Chocolate and other food preparations containing cocoa Sugars, nes, incl. chem. pure lactose etc; artif. honey; caramel Animal feed preparations, nes Prepared or preserved vegetables nes (excl. Frozen) Natural honey Frozen fruits & nuts Beet-pulp, bagasse and brewing or distilling dregs and waste Oil-cake nes Frozen vegetables Source: ITC and own calculations This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 23

24 Product group Table 5. Export of Bulgaria compared to the world export and the export of the world s leading exporter by product groups Rank in World Export Share in World Export Share in the Export of the World s Leading Exporter Export Growth Rate 2011/2001 (%, 2001=100) Export Growth Rate 2012/2001 (%, 2001=100) Q1, Q1, Bread, biscuits, wafers, cakes and pastries % 0.66% 0.64% 0.73% 1.58% 5.00% 4.66% 4.70% 669% 711% Meat & edible offal of poltry meat % 0.70% 0.66% 0.58% 1.71% 2.66% 2.55% 2.50% 500% 519% Cane or beet sugar and chemically pure % 0.16% 0.17% 0.05% 0.06% 0.83% 0.87% 0.50% 6238% 3038% sucrose, in solid form Safflower, sunflower/cotton-seed oil & fractions % 1.60% 1.38% 1.72% 4.96% 4.35% 4.85% 4.00% 915% 1014% Cheese and curd % 0.31% 0.33% 0.28% 1.12% 1.88% 1.88% 2.10% 307% 347% Preserved fruits nes % 0.56% 0.47% 0.38% 0.99% 3.59% 2.88% 2.30% 879% 829% Chocolate and other food preparations containing cocoa % 0.27% 0.28% 0.41% 0.39% 1.88% 1.55% 1.70% 895% 1057% Sugars, nes, incl. chem. pure lactose etc; artif. honey; caramel % 1.42% 1.35% 1.43% 2.58% 5.15% 4.98% 4.30% 572% 664% Animal feed preparations, nes % 0.35% 0.41% 0.50% 1.50% 2.33% 2.90% 3.00% 350% 475% Prepared or preserved vegetables nes (excl. Frozen) % 0.35% 0.33% 0.40% 1.47% 3.26% 2.93% 2.20% 292% 290% Natural honey % 1.59% 1.83% 1.95% 3.70% 16.37% 11.90% 18.80% 483% 625% Frozen fruits & nuts % 0.59% 0.72% 0.42% 3.06% 5.56% 4.68% % 351% Beet-pulp, bagasse and brewing or % 0.71% 0.59% 0.71% 0.34% 0.97% 1.09% 1.00% 711% 749% distilling dregs and waste Oil-cake nes % 0.37% 0.67% 0.53% 2.32% 3.98% 2.26% 3.80% 387% 984% Frozen vegetables % 0.37% 0.30% 0.24% 1.94% 1.83% 1.74% 1.40% 132% 115% Source: ITC and own calculations This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 24

25 Data show that in 2012 the groups Sugars, nes, incl. chemically pure lactose, etc; artificial honey; caramel, Safflower, sunflower/cotton-seed oil & fractions, Oil-cake nes and "Natural Honey" had the best ranking among world export leaders. These product groups have export advantages due to the fact that they rely on local raw materials which are traditional for Bulgaria. The group Cane or beet sugar and chemically pure sucrose, in solid form has the lowest share (0,17%) in world exports. The export of all analyzed product groups grows by high rates, which indicates an increasing demand of food products manufactured in Bulgaria. In the first quarter of 2013, the country remains in the top 20 world exporters of Sugars, nes, incl. chemically pure lactose, etc; artificial honey; caramel, "Beet-pulp, bagasse and other waste of sugar production, waste and residues from brewing or distilling dregs" and "Natural honey" which once again confirms the continual development of these sub-sectors and the successful positioning of their products on international markets. SMEs in sector Food Products The above presented data on analyzed product groups apply to all companies in the sector, and not only to SMEs. The lack of sufficient statistical information does not allow identifying the share of SME export in the export of each analyzed product group. Some orientation is provided by the results of the conducted survey. Companies in the sample declare that in 2010 they exported mainly dairy products (cheese, cottage cheese, and white cheese), preserved fruits and vegetables,and chicken meat, which corresponds with the presumed profile of small and medium enterprises. According to 85% of interviewed managers, the companies have high production capacity for the manufacture of export goods. Even some companies not exporting yet but willing to do so declare the availability of such capacity. All of the companies (100%) declare that their managerial teams have unanimous will for making exports. Due to the profile of interviewed companies in the sample, they export final products with more specific qualities (by suggested classification raw material, semi-finished goods, final products), with a high degree of processing and, respectively, high value added. It can be concluded, therefore, that this is the niche for greater success of SMEs in exports. The above conclusion is further confirmed by the responses of interviewed managers of SMEs, who consider high technology level and high level of qualification of personnel in small and medium-sized enterprises as the key (most important) factors for export success. These are alsothe main prerequisite for creating goods with high value added. Participants in the focus groups underlined explicitly that generally Bulgarian products are not recognizable on international markets, or, if recognizable, they are associated with lower price and quality levels, which doesn t meet the truth for many of today s export goods. This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 25

26 COMPETITIVENESS OF THE EXPORT OF GOODS ON FOREIGN MARKETS Sector Food Products, general The main markets of the analyzed fifteen product groups exported by sector Food Products are in the EU, as follows: Bread, biscuits, wafers, cakes and pastries - The main markets include Romania, Poland, UK, Serbia and Greece. The main factors are geographical proximity, presence of traditional relations and taste preferences. - On the leading market, Romania, the products with largest export include pizzas, quiches and other unsweetened bakers, fruit tarts, currant bread, panettone, meringues, Christmas stollen, croissants and other bakers added sweetener '' and toasted bread and similar toasted products, i.e. goods with longer expiry date and easy to transport. - Bulgaria s main competitors on the Romanian market are importers from Poland, Germany and Italy, which are among the leading exporters of this product group. - Trade balance of this product group on the Romanian market is strongly negative which makes it a lasting export destination in future. Meat & edible offal of poultry meat - The main markets are France, Romania and Belgium, as in 2012 the export to Greece increases four times, i.e. countries which use these products as raw material in other productions. - On the leading market, France, the products with the largest export volumes include frozen edible fatty livers of ducks of the species domesticus, fresh or chilled boneless cuts of ducks and guinea fowls of the species domesticus, and fatty livers of domestic ducks, edible, fresh or chilled, which are with low value added. - Our main competitors on the leading market are companies from Belgium, the Netherlands, Germany, Poland and Italy, where poultry farming is highly developed. - Trade balance of this product group on our leading market is positive, since France is a traditional producer of Meat & edible offal of poltry meat. Nevertheless, this market remains of considerable importance to the Bulgarian producers due to large volumes imported. Cane or beet sugar and chemically pure sucrose, in solid form - The main importer of the Bulgarian products is Romania due to the geographical proximity of the countries. This document has been developed with the financial support of Operational Program Bulgarian Economy, cofinanced by the European Union through the. Bulgarian Small and Medium Enterprises Promotion Agency bears full responsibility for the content of this document which shall not be regarded, by any circumstances, as an official position of the European Union or the Contracting Authority 26