Agribusiness from the Inside: Margins, Imports and Processing

A good year does not solve old problems

For Radostina Zhekova of the Dobrudzha Union of Grain Producers, the good 2026 harvest should not create the illusion that the problems facing farmers have disappeared.

"This good year does not hide anything. Our biggest enemy remains ourselves," she commented.

The climate is already changing the structure of production itself. Repeated problems with corn have pushed barley further forward, while rapeseed remains highly dependent on specific conditions. For northeastern Bulgaria, Zhekova described this year's good rapeseed result as "pure luck." The trend towards more winter crops is likely to continue, but the cost may be an increasingly difficult crop rotation.

She was even more critical of the way farmers themselves manage their businesses.

"We are economically illiterate," Zhekova said, pointing to the commercial side as one of the weakest areas in farm management. Today, a farmer has to be an agronomist, machinery operator, meteorologist, accountant, producer and trader at the same time, yet it is often the last of these roles is the weakest link.

"Many of us do not know the cost of producing our own crop. If you do not know your production cost, there is no way to know which price actually gives you a profit."

This makes price risk management increasingly important in a market where simply producing a good crop is no longer enough.

Trading now works by different rules

Nikolay Manov of Agro Trading Bulgaria presented a different perspective on risk. According to him, the combination of geopolitics, expensive logistics, quality differences and an increasingly fast-moving market has made grain trading significantly more difficult. So difficult, in fact, that new entrants can hardly afford the normal process of gaining experience through mistakes.

"Now is not the right time for new companies to enter the sector. The market will not give them enough time to learn from their mistakes," was Manov's message.

In his view, traders are currently facing some of the greatest pressure anywhere along the chain.

Margins still exist, however. They are simply achieved in a different way. The old model of buying grain at harvest, holding it for several months and relying on prices being higher later in the season is no longer sufficiently reliable.

Spot and back-to-back transactions are playing an increasingly important role. In these deals, the trader already knows at the moment of purchase where the commodity will be sold, when it will be delivered and who the end customer is. This reduces open price exposure in an environment that is becoming increasingly unforgiving of poor decisions.

Record oilseed crops, so why are imports still needed?

Some of the strongest figures in the discussion came from Yani Yanev of Papas Oil and the Bulgarian Oilseed Oil Producers Association.

More than 600,000 tonnes of rapeseed, around 2.5 million tonnes of sunflower seed and roughly 3.1 million tonnes of oilseeds in total, including stocks.

"This has never happened in my professional career," Yanev said.

According to him, it is not only the volume that is exceptional. Quality is also among the best processors have seen, with high oil content and low impurity levels. He attributed the result both to weather conditions and to the experience and professionalism of Bulgarian producers.

But the record crop immediately opened one of the most contentious questions of the panel: if Bulgaria has so much domestic raw material, why does it continue to import sunflower seed?

Yanev's answer lies in the scale of the processing industry. Bulgaria has around 4.5 million tonnes of annual processing capacity. According to his data, around 810,000 tonnes of sunflower seed have been imported this year.

The reason is not only the total amount of raw material available, but also when it becomes accessible. Processing plants have to operate continuously and fulfil pre-agreed sales programmes for sunflower oil, meal and other products.

When farmers hold back from selling, the fact that sunflower seed exists in the country does not necessarily mean it is available to processors at the moment they need it.

This is exactly where the two positions collide. The producer looks for the best timing and selling price. The processor looks for continuity, predictability and capacity utilisation.

Petar Dimitrov placed this dispute in a broader context. Farmers understandably see large imports from Ukraine or Argentina as potential pressure on domestic prices. But the example of Argentine sunflower seed also showed the other side of the equation.

Even rumours of significant imports had a psychological impact on the market, although the actual deliveries stretched over several months. At the same time, some of the highest sunflower prices were observed in May, while Bulgarian production was exported under very favourable price conditions in May and June.

The issue is therefore no longer simply about who is putting pressure on whom. What does the Argentine farmer do? How does the Bulgarian farmer respond? What does the Turkish buyer choose? What does the processor need?

Every participant follows their own costs, prices and market opportunities, while Bulgaria remains part of a global market in which price signals inevitably move commodities across borders.

More processing, more value retained in Bulgaria

Petar Kirovski from the Ministry of Agriculture explained how official crop and stock estimates are formed.

The data do not come from declarations alone. Information from warehouses and processors is compiled and combined with weekly updates on sowing and harvesting, as well as physical field surveys. The Ministry of Agriculture does crop surveys three times, while the final physical survey used to estimate yields is conducted around ten days before harvest.

Christian Draganov of Tehra, the Union of Bulgarian Millers and the Union of Compound Feed Producers, shifted the discussion towards what happens after the raw material has been produced.

Recent years have already forced the feed industry to change formulations because of weaker crops and expensive protein components. Even now, when availability is better, geopolitical uncertainty is so high that companies struggle to plan more than three months ahead.

The bigger question, however, was why Bulgaria continues to export such a large share of its grain as raw material instead of turning it into higher-value products.

Draganov described the desired direction very clearly: Bulgaria should reach a point where it processes around 5 million tonnes of wheat and exports around 1.6 million tonnes, rather than operating with almost the opposite ratio.

Türkiye also entered the discussion as an example. Strong milling capacity, access to raw materials, large markets and policies that allow processing to remain competitive.

For Draganov, this is one of Bulgaria's biggest untapped opportunities.

In the end, the discussion returned to the question of whether it is even possible for farmers, traders and processors to maximise their profits at the same time.

Radostina Zhekova's answer perhaps best captured the mood in the room:

"In business, everyone should be equally unhappy. If everyone is equally unhappy, it means everyone has won."

Behind the humorous wording lies a serious issue. The chain is too interconnected for one part of it to profit at the expense of the others over the long term.

If the producer loses, sooner or later that will affect the trader and the processor. If processing plants are not competitive, the farmer loses a domestic buyer. If traders cannot manage risk and logistics, the commodity struggles to reach the market.

That is why the discussion during the third panel of Grain Academy 2026 went far beyond the question of who is right in the dispute over sunflower prices.

The more important question is how Bulgaria can not only produce more, but manage what it produces better, process more of it domestically and retain a larger share of the added value within the country, without forcing one part of the chain to bear the full cost.