XI National Conference with International Participation
15 November, 2018
Premier Hotel Rus, Kiev, Ukraine
Organizers: Infagro, Dairy Union of Ukraine
Since 2008, when the first DAIRY BUSINESS conference was held, many changes have occurred in the dairy industry of Ukraine. Those who regularly attend this event of dairy processing professionals – and there are many of them – have the opportunity to compare, discuss and draw conclusions.
This year the conference traditionally began with Ukrainian dairy industry overview presented by Vadym Chagarovsky, Board Chairman Dairy Union Ukraine. In his opinion, the crisis is over and the current year is a turning point for the industry which has good prospects. Dairy production is growing (except for cheese products, spreads and canned milk), consumption of dairy products is increasing, Ukrainian dairy exports are entering new markets, and the share of extra-class quality milk is growing. There are certain problems, of course, and to solve them it is necessary to actively lobby for the solution of legislative issues, combining for this purpose four dairy unions into one. It is also important for processors to introduce the practice of long-term contracts with milk producers and establish a 10-day term for trading networks to pay dairies for the supply of goods. It is necessary to establish the dairy industry research center and build new plants. As for the state support, it is necessary to insist on reduction of the VAT rate for dairy products, which in many countries is 5-8%, while in Ukraine 20%. Abolition of VAT on imported equipment and solving the land issue to make possible for dairies meeting the state requirements for sewage treatment would also contribute to development of Ukrainian dairy industry.
Addressing colleagues, Vadym Chagarovsky urged them to pay attention to production of dairy products with high added value: isolates, proteins, lactophilin, etc.
Maxym Fasteyev, Lead Analyst at Infagro, continued on the topic of Ukrainian dairy industry speaking on the milk prices. He convincingly showed that the domestic price of milk in Ukraine depends on the global dairy market situation. He also informed on the possibility of forecasting the prices using the Infagro Dairy Indices.
Jukka Likitalo, Secretary General of Eucolait, international organization on dairy trade, presented the delegates a detailed overview of the world dairy trade prospects and provided analysis of the implications of the major international agreements, some of which have already been ratified, and some will be put into effect in the near future and will significantly affect the dairy trade patterns. He noted that the countries in Asia and Africa, where the middle class is growing and westernized food patterns are becoming more popular, have good dairy sales opportunities. But there are some points of uncertainty that exporters must take into account when exporting to these countries. Yukka Likitalo also noted the prospects of trade in cheese and fat filled milk powders.
Piotr Kandyba, Board Member Polish Chamber of Milk, began his speech with a positive statement that Ukraine will double milk production in 5-10 years. He shared experience of the dairy industry development in his country and said that despite the fact that dairy products are traditional in Poland, their consumption still needs to be promoted. It is also necessary to carry out special work to promote Polish dairy exports, which now covers 106 countries. Piotr Kandyba also presented an overview of dairy imports to the EU and noted that the EU imports most of the butter from New Zealand and Ukraine.
A special issue discussed at the conference was establishing dairy cooperatives. Jelle Zijlstra, Dairy Economist at Wageningen University & Research, described how dairy cooperation emerged in Holland, how it has developed and how it works now. Discussion on the topic of dairy cooperation continued during the panel discussion moderated by Roman Korinets, Advisor National Association of Agricultural Advisory Services of Ukraine, in which Vitaliy Kovalchuk, Head Molokija Dairy, Yuriy Lupenko, Director National Centre Institute of Agrarian Economy and Mikhail Sokolov, Deputy Head All-Ukrainian Agricultural Council. Different opinions were expressed regarding the prospects for cooperation of individual owners of cows and family farms. Once again the question was raised – whether to consider cooperation of small scale producers of milk as a business or as a social project. Panelists noted the inconsistency in the definition of the concept of “farmer” in Ukrainian legislation and imperfection of the legislation itself, which restrains the development of cooperation. Jelle Zijlstra expressed opinion that since there is an obvious difference in Ukraine between different categories of milk producers – individual owners of cowspersonal, family farms and large-scale producers, there cannot be a universal policy on dairy cooperation, for each of these categories it makes sense to develop a separate policy.
Roman Cherepakha, Ivestment Director Horizon Capital, spoke about the possibility of investing in the development of dairy processing. He gave examples of successful projects and spoke about global trends in mergers and acquisitions of dairy companies. According to his data, in dairy industry investors are interested just in milk processing, and most of the mergers and acquisitions occur between the dairy companies of the top twenty. He also outlined the requirements for the dairy companies seeking investment.
The harmonization of Ukrainian milk legislation with EU requirements was presented by Mykola Moroz, Director General of the Directorate of Food Safety and Food Quality at the Ministry of Agrarian Policy of Ukraine. There was an exchange of views on the terminology used in the prepared draft law. The issue of ineffective veterinary approval procedures for exporting was also raised.
Vitaliy Kostyukov, Head Sales Kieselmann Bel, one of the sponsors of the conference, presented the capabilities of Ecoprot, membrane filtration equipment that allows a processing plant, even a small one, to make production practically wasteless and process whey into innovative products that are now in high demand and widely used in different areas. Interestingly, the company provides equipment for testing rent so that the dairy can use it and make a purchase decision.
There was also an interesting presentation of Maryna Kostromina, KANTAR TNS Client Relations Director, who spoke about perception of dairy products advertising by consumers, as well as the opportunities that the company has to study the impact of advertising materials and their further adjustment to increase efficiency and create consumer motivation for purchase.
The conference ended with a discussion on the problem of falsification of dairy products. Participated Volodymyr Lapa, Head State Food Safety & Consumer Protection Service, Lidiya Karpenko, President Dairy Union of Ukraine, Olexander Chagarovsky, Professor ONAPT, Volodymyr Bashynsky, National Expert FAO and Vladyslava Myronova, Public Control. The conference participants learned about the interaction of the organizations that, within their powers, are trying to fight falsification. It turned out that despite the possibility of taking meadures, the State Food Safety & Consumer Protection Service cannot actively influence the situation, because citizens do not officially address it with facts of falsification, and without these statements it is impossible to take any measures. There were also raised issues of punishment for falsifying products and protecting reputation of the enterprises. The participants could recall only one case when the dairy processing company reacted to the allegations of falsification, defended its reputation in court and won the case. The panelists urged dairies to make efforts to fight against falsification and actively respond to media reports about falsification of dairy products, where the name of their company is mentioned. Otherwise, consumers and the industry colleagues will have reason to believe that the company produces falsified products.
The discussions on the topics of dairy cooperation and falsification of dairy products showed that these issues require special attention of the professional dairy community and it may be worthwhile to organize special meetings of interested organizations and companies for more detailed discussion and taking concrete actions.
The conference once again demonstrated that Ukrainian milk processors are interested in development of the industry, they seek opportunities to modernize production and improve technology and business management.
The organizers of the event express their sincere gratitude to all the delegates for their active participation. Special thanks to sponsors of the event, Elopak, KOMO, Loostdorf, PepsiCo, Molokija, Kieselmann Bel and the Kingdom of the Netherlands Embassy in Ukraine for their valuable support.
Looking forward to seeing you next year at