Hops business hopes for a skip and a jump

Newsroom 06/10/2008 | 15:58

While they do not provide the majority of the revenues for Moragroind SRL, the company owned by the Mora family in Mures county, the hops business represents a big part of the firm's operations. The family owns four farms in Sighisoara and two others in Sachiz, totaling around 130 hectares of cultivated plant and around 300 hectares of sustaining piers for these cultures, Akos Mora says.
“In the 1990s, the 2,800 hectares of hops culture vanished, since all the sustaining pillars were stolen and sold for old iron. Since then, I guess there are no more than 220 hectares remaining in Romania, cultivated by small and private-owned farms,” says Mora. The businessman complains that he has lost around four hectares of pillars because of thieves. “At first they stole by night, now they just come with bolt cutters,” Mora says. But despite problems with criminality, he seems pretty determined to expand the company's hops business.

Brewing a business
The family entered on this market segment when the father, Acatiu Mora, started to buy land from state-owned farms in 2001. Locally, the way the Mora family began to buy the old farms owned by the state in Sighisoara has been highly contentious, involving the Hopfprod and Moragroind companies, the latter of which has Acatiu Mora as shareholder.
The main dispute has involved the contrasting business results generated by two competing companies, Hopfprod being close to bankruptcy and its rival expecting increasing turnover this year, Mora said. “When my father acquired the former state-owned hop company, the assets consisted only of one abandoned barn and the piers,” says Mora Jr.
According to the businessman, the Mora family and two other farm owners from Mures county generate about 95 percent of the total hop cultures in Romania.
“This is not only because of the soil, but also because we started the business and we are interested in developing it further. At the present time, from our production, we can only meet nine percent of the demand coming from local beer producers. The rest comes from imports,” says Mora.

Hops, where profits climb slowly
Hops are not an easy plant to take care of. It takes three years of farming time until the plant becomes fully productive (meaning that it has climbed to the top of the pillar). Only after the three years have passed can a farmer think about full production and getting a return on the investment.
The costs of producing this plant are about EUR 3,000 for one hectare, which, according to Acatiu Mora, means a business can be profitable only if the farm produces more than 1,000 kilograms per hectare. According to him, one kilo of hops can be sold for at least EUR 50 and at most EUR 150. In 2007, farmers got a government subsidy of EUR 120 per cultivated hectare, depending on the production achieved.

Costs rise as production remains low
According to the representatives of the Independent Brewery Employers Association (PSIPBR), hops were almost eight times more expensive in 2007, reflecting the lack in production not only in Romania, but everywhere else. The increasing prices of the raw products were mirrored in the shelf price.
“As Romania does not even have the minimum production to meet demand, we plan to expand our cultivated plots as much as possible. We cannot begin to talk about exports. The local beer producers have to import hops to maintain production,” Akos Mora said.
Moragroind attained a turnover of EUR 2.3 million in 2007, and had assets worth EUR 2 million. For this year, Mora expects turnover to increase to EUR 3 million, but 40 percent of this figures comes from the company's extra-curricula activities.
Even though it seems to be the Mora family's cherished business, hops are not producing enough profits, so the company is involved in construction, which, Akos Mora said, contributes 40 percent of the company's total turnover.
According to Mora, Moragroind has refurbished several production units in Sighisoara, such as the local textile producer Transtex, a ceramic production plant, as well as undertaking the modernization and office building expansion for shirt producer Tarnava and several other local facilities. The company's activities in this domain have brought it a turnover equaling EUR 1 million so far.
For the near future, planned projects include building some kindergartens, private office buildings and a city hall HQ.
He says the company mainly takes out consumer credit of up to EUR 100,000 to ensure the necessary cash flow.

By Magda Purice

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