Lactalis will Transform Dairy Industry

Ljubo Jurcic claims that because of Lactalis the state would urgently have to change its attitude towards the dairy industry.

Ljubo Jurcic, economic expert and the Social Democratic Party’s (SDP) economic strategist told Javno that he doubted the good assessment of the Dukat dairy company’s value assessment. The company was sold by owner Luka Rajic to the French dairy company Lactalis for two billion kuna. Jurcic connected the business of the century, as many call the sale of Dukat, with its recently announced strategy of capital profit taxation, stressing that foreign investors agreed with it and only a few Croatian rich people in power criticise it to protect their empires they had built during the 1990’s privatisation. 

You said that it would be most fair that Luka Rajic give at least 20 percent of the earnings to charity and invest the rest in a new project in Croatia. Why should he do that? Why could not somebody do whatever he wants with their money?

As opposed to many, Luka Rajic preserved the company from failure. But, it is a question whether this is a relevant assessment of the company’s value because it is improbably that somebody in that branch can make that much money in 15 years. One wonders whether those assessments were good. Still, Rajic took his chance. The problem is that in Croatia there is a concentration of property in the hands of a few and citizens have nothing from it. So, it would be fair that a part of the money be paid through tax. There is something called social responsibility of an individual and so at least 20 percent of the profit should go to charity and the rest should be invested in a project for the development of Croatia.

Do you not think that your plan of capital gain taxation has destimulated entrepreneurship?

I do not, because this is done all over the world except for here. So, as long as somebody invests into production, economic growth, their profit would not be taxed. There is no taxation of unrealised profit. Everything earned, if returned back into production, would not be subject to taxation. But, those who now earn millions have a difficult time separating ten to 20 percent of their earnings. These are a few people and they are the loudest and most powerful, so they criticise my model the most. I spoke to many foreign entrepreneurs and they deem it completely normal to do so. They feel affected.

Concerning investment into development, do you think there is a danger that lactalis sells everything? Will the entry of this dairy giant destroy the Croatian dairy industry?

I do not think they will sell off Dukat because it is a big international company that has no need for that. But, the fact is that it would be cheaper for them to, for example, buy powdered milk from Metro than to purchase fresh milk from our dairy producers. It is certain that Lactalis will set stricter criteria for the purchase of milk, demand more efficient business, milk quality, etc. This will all affect manufacturing associates, the distribution, but also the state policy towards the dairy industry. This policy should certainly change. As far as I know, the state has so far subsidised domestic milk buyers and manufacturers, but a foreign company such as Lactalis does not need subventions.