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. Last Updated: 07/27/2016

Romania Pig Plant Failed by Reforms




TIMISOARA, Romania -- Mircea Stoita, former manager of Comtim, Europe's largest pig processing complex has no doubt who is to blame that the debt-ridden facility has been put up for sale.


It was, he says, World Bank officials based in far off Washington who ordered restructuring plans without setting foot in the plant for the past three years.


"The World Bank has done more damage in Romania than any other institution since the end of communism," Stoita, now an adviser to Comtim, said at the farm's administrative office in the center of Timisoara, 600 kilometers west of Bucharest.


"No expert on pork from anywhere in the world suggested Comtim was not a good operation. Only the World Bank said so after tackling the issue on some pavement in Bucharest."


With Romania desperately trying to meet conditions to secure International Monetary Fund and World Bank credits, Comtim, a communist-era showcase of output and efficiency, became a watchword for bad management with both institutions.


Under megalomaniac dictator Nicolae Ceausescu, the complex of 2,500 buildings on 900 hectares was an obligatory stop for any honored foreign guest in the country.


Ceausescu used its prodigious output of pork to help pay off $11 billion in foreign debt in the late 1980s in one of communist Romania's darkest periods. Its retail shop, still in operation, was one of the few outlets where hard-pressed consumers from throughout the country could buy meat.


Now, the World Bank has made a cleanup of Comtim's finances a condition for securing a $150 million slice of an Agricultural Structural Adjustment Loan to cushion the effects of reform.


Its former local representative, Francois Ettori, described Comtim as the "epitome of issues faced by Romania" and demanded fast government action to stop the hemorrhage of credits.


Faced with debts equivalent to $130 million, mostly to Banca Agricola, the state bank traditionally providing farm credits, Comtim was turned over earlier this year to a liquidator, PricewaterhouseCoopers, and tenders called for its core assets.


Ideally, this would mean a package including four fodder plants, pig breeding farms, four slaughterhouses and retail shops - in Timisoara and the prairie-like countryside around it. PricewaterhouseCoopers says it received a number of bids by the end-September deadline it set, but offered no details.


Pig numbers, once 1.25 million, were reduced in the last six months from 800,000 to 550,000, at the World Bank's behest. Staff was cut to 4,700 from 12,500 before the 1989 anti-communist revolution.


Timisoara residents recount how in the runup to liquidation Comtim frantically offered pigs for sale throughout town, many of them below their ideal weight, to meet World Bank demands. Worse was to come.


Comtim kept running out of animal feed. With the government unable to provide credits to buy more, PricewaterhouseCoopers scrambled to come up with 20,000 tons of grain last month to keep the pigs from starving.


Comtim officials said privately their charges went without feed for a week in the spring until supplies were found.


Emilian Radu, the PricewaterhouseCoopers official overseeing the liquidation, says Comtim's reputation as a quality breeder and processor is of little interest now.


His job is confined to satisfying creditors.


And that means creating a smaller Comtim to preserve both jobs and an outlet for local grain producers.


"What we are dealing with in Romania are management issues. We have wonderful people from a technical standpoint - in pigs, in steel, in textiles. But we need financial and marketing expertise, too," Radu said in his Bucharest office.


"I can understand their frustration. They're superb technical guys, but that's not enough when you have an open market as we did after 1990. They weren't used to competing."


Back on the Comtim site, Stoita sees the farm as a victim of unreasonable directives and a volatile market.


In the first years after the 1989 anti-communist revolution, Comtim lost Western European markets when it fell foul of European Union regulations banning pork meat subject to a pig fever vaccination performed routinely in Romania.


Matters were compounded when world pork prices sank from $1,750 per metric ton in 1996 to $500 in 1998. The post-Soviet market then collapsed when Russia sank into economic crisis last year. With prices higher and Russia's economy on the mend, demand rose, but the reduced stocks left Comtim unable to meet it.


In fact, Stoita fumes, Romania, a largely rural nation where 5 million pigs are kept at private homes, had to resort to imports in the past year.


"We are dealing with live pigs here, not politics. If we produce only when the market is functioning and demand is high, we will never have any pigs," he said.


"Romania would have been better off producing and exporting meat worth $150 million instead of reaching out to the World Bank with an outstretched hand for that same $150 million."


Radu says many Romanians have unfairly criticized his firm as an executioner of a longstanding tradition.


"If you are witnessing a funeral, there is no point blaming the gravedigger. The cause of death lies elsewhere," he said.