ARSEN DIDUR, Executive Director Union of Dairy Enterprises of Ukraine: On the future of Ukrainian dairy industry

The war that russia started against Ukraine and the entire civilized world continues.  For two months of hostilities there has been caused enormous damage to economy of our country, including agriculture.  The sown areas have been shrunk, the seaports through which the main flow of food exports had been passing were blocked.  The world began to talk about the threat of famine, especially in the countries dependant on food supplies from Ukraine.  The world food prices are rising.

Against the background of all the tragic events of last months, we can already say that the dairy industry of Ukraine has shown its ability to withstand the extraordinary challenges and threats and ensure production even in times of war.  And this is a great merit of our people who work in the dairy industry.

The threats are not over, the war continues.  But after the shocking first days, dairy companies quickly resumed supply chains, retained their staff and established sales, including taking advantage of sales to the state.  In addition, our dairies continue providing direct supplies to the Armed Forces of Ukraine and deliver dairy and other products to frontline regions.  The dairies that were in the occupied territories for some time are resuming operations.

The shelling continues, the threats remain.  But we need to think about the future of the dairy industry now.  Because I believe that among all agricultural sectors, the dairy industry is the most promising.  It is, figuratively speaking, a hen that could lay golden eggs.  But so far the emphasis in agricultural production has been on crop production.  Ukraine’s image as a “breadbasket of the world” is built on wheat and corn exports.  But export of raw materials gives almost nothing to development of the country.  The recent publication in Ukrajinska Pravda made by Yulia Svyrydenko, Deputy Prime Minister and Minister of Economy of Ukraine, is devoted to the ways of restoring the economy and importance of production and export of value-added products.  I completely agree with position of the Government given in this publication.

However, I would like to point out that when it comes to agriculture, it is necessary to understand and take into account the specifics of each of its sectors, especially dairy farming and its connection with processing.  I should say that when the Dairy Union is communicating with officials, it seems that they do not understand the specifics and peculiarities of dairy production.  After all, a cow cannot be switched on and off to interrupt the process.  She cannot be “set on pause” to wait until decisions or resolutions are taken, she will stubbornly give milk, which must be processed immediately.  Every day, without breaks and vacations.  It is also worth to remember dairy production is a business.  It is operating as long as it makes sense to do it.  And this is a special business – it provides food security of the country, which is especially important in times such as we are experiencing now.  This means that the state should provide support to dairy industry.  So far, this has not been the case, all dairy related decisions were more on paper, in numerous statements and programs, in which state funding has been allocated as one aggregate package to a diverse group of cows, snails, pigs, goats and bees.  With this attitude, dairy farming has reached such a state that keeping cows has become not just a business, but business for desperately brave heroes.

So we need to think about future: get a strategy for development of dairy industry with defined and understandable responsibilities taken by the state.  And these responsibilities should include creating conditions to make doing businesses of milk production and processing profitable and the mechanisms of state support for the industry clear and guaranteed.  After all, the natural and climatic conditions of Ukraine are extremely favorable for development of dairy farming.  The use of all available resources – fertile land, our traditions of dairy farming, based on modern advances in milk production technologies, a network of processing plants and skilled and experienced people – is what opens wide opportunities for development of the dairy industry.  And this is especially important given the prospect of Ukraine’s accession to the EU.

In a recent interview with German newspaper Agrarzeitung, Alexander Anton, Secretary General of the European Dairy Association, mentioned that in the EU, raw milk prices reached record highs and this did not cause any increase in supply.  This is, he said, a new phenomenon, which shows that even the current high prices for raw milk barely cover the ever-increasing production costs.  Speaking about the EU countries, he also mentioned that agreements between retail chains and dairy suppliers provide for much lower prices than required by dairy plants.  He believes that in the light of this development, the recent bankruptcy of one of Belgian dairy companies is a clear warning signal.  I can say that in Ukraine, milk processors, in addition to their problems ofdomestic origin, face the same – rising purchase prices for milk, increasing production costs and unregulated relations of suppliers with retailers.

The dairy industry of Ukraine, building its relations with European colleagues, would like to find the forms of win-win cooperation.  First of all, it should be borne in mind that the most important problem of Ukrainian dairy industry is lack of quality raw milk, which is why our processing plants tend to be underloaded (although now several plants are fully utilizing their capacity).  And here, I think, we need to consider creating the opportunities for European farmers to work here in Ukraine, contributing to spreading of modern technologies and development of commercial milk production.  I mean large farms that few in the EU can afford.

In turn, our dairy industry would like to receive assistance in technological re-equipment of some enterprises to ensure that all Ukrainian products meet the EU standards of quality and safety.  After all, we are interested in exporting value-added products.  To which markets?  It is a question of persistent work of the corresponding state structures and marketing departments of the exporting enterprises.  But we must move away from the practice of exporting goods of the quality called “for the CIS countries.”  We need to focus on production of high quality products, including deep processing products, which would suit the most demanding consumers in different countries.

As for the state-level trade agreements, I believe that not only state officials, but also representatives of Ukrainian dairy industry should take part in negotiations on dairy trade with EU.  After all, dairy industry is quite complicated and it requires deep understanding of its features in order to provide a balance of interests in the agreements.

I am confident that Ukrainian dairy industry joining the European family of milk and dairy producers will strengthen both the EU dairy market and our market, reduce dairy products prices for European and Ukrainian consumers, increase sustainability of the European dairy industry and enable to rise to a new level many of our enterprises.  And the first steps towards rapprochement must be taken now.

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