VASYL VINTONYAK, Director Infagro: Milk produced in private households will be banned, but not quite and not immediately

Since last September, officials and experts have been speaking a lot about the prohibition of industrial use of second-grade milk starting the New Year, January 1, 2018. And the reason was not the low-quality of the milk which is sometimes even dangerous, but because some time ago somebody introduced this requirement to the Association Agreement with the EU (which came into force only in September, 2017).

But when decisions were taken, a few years ago, who among our officials knew what would happen later, where they would be and when the Agreement would come into force? Who then been driving into the dairy industry problems? But it came the time to make appropriate decisions to introduce the changes into Ukrainian legislation. So, officials decided that since January 1, 2018 it would be necessary to ban the use of 2nd grade milk in industrial milk processing.

The decision was somewhere right, but there are several wrong things with the plan that forced the government to reconsider the decision and postpone the date of entry into force of the prohibition for half a year so far. By the way, even now, in mid-January, not many media knew about this posponing what can be seen from the news headlines.

By now in Ukraine 70% of milk is produced by households, and this milk is most often classified as the 2 grade. In milk processing, the share of such milk is smaller, but of the 4 million tons of milk coming to dairies, at least 1.5 million tons is the milk collected from private households. That is, in compliance with the law, Ukrainian dairy industry should reduce production of dairy products by more than a third. This, in turn, would initially lead to a significant increase in milk prices of “not 2nd grade”, then to a rise in prices of dairy products, and, consequently, to a significant increase in dairy import. That is, Ukraine would quickly change its position of a major exporter of dairy products (up to 1 million tons per year in terms of milk) to position of a serious dairy importer.

But such an affecting situation could become possible only in case of strict implementation of the law. However, given the attitude to keeping the laws by a large part of Ukrainians, many milk producers would most likely not stop collecting raw milk from the population. Spinny entrepreneurs would have come up with new schemes, when a part of the 2nd grade raw material would miraculously turn into a premium raw milk.

Apart from the lack of qualitaty raw milk, the decision on the postponement of the ban was also influenced by purely political factors. Much of the peasants who produce milk in households are pensioners, that is, the most disciplined electorate. So, some well-known politicians who “wave heyforks”, demand to revise the Association Agreement with the EU in connection with the prohibition of the 2nd grade milk.

Actually, given that in domestic milk production engaged are mostly elderly peasants, even without changes in legislation in five years the purchase of the 2nd grade milk from households will have almost completely ceased. The reason for this is simple: pensioners who are currently keeping cows will not live forever, and young people refuse to be involved in this not-too-profitable business.

What will happen next? In summer, officials are likely to postpone the entry into force of the prohibition on procurement of milk taken from households, and then again and again, they will be posponing it for another half a year. And so will continue until the time when agricultural enterprises will have increased the milk production by at least a quarter. And this, in case of very favorable circumstances, will not happen earlier than in three years. If the government does not practice such put-off, then Ukrainian market will soon get overflown with European dairy products. And if this happens, then restoring Ukraine’s position as a leading dairy exporter will be extremely difficult.

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