Autumn has not brought good news to Ukrainian dairy producers. Unfortunately sham truce in the east has not resulted in the end of trading war of Russia against Ukraine.

Both Ukrainian and European dairy producers strongly suffered from the wars. Sales are weak, prices are lowered. The ban influences negatively the Russians also, but the ambitions are more important. It is said that Europe may ease sanctions on Russia, which does not allegedly strain the situation in Ukraine any more. In that case Russia may lift sanctions also.

 It is doubtful whether it will concern Ukraine. Most likely, it may occur if Russia introduces import duties for Ukrainian products. That may happen quite soon. The government of Russia adopted the appropriate resolution with delay of coming into force through the end of 2015. At the same time the delay is possible only if Ukrainian authorities cancel even an implementation of EU integration legislation. It means if there is the next aggravation of the conflict, Russia can introduce tariffs for Ukrainian exporters. For dairy producers the duties are not worse than today’s uncertainty. It would be better to pay tariffs than to be under trading restrictions. But both introductions of duties and non-tariff restriction may be expected from Moscow.

For now, when sales to Russia are not permitted, some Ukrainian producers wait for the next European inspection, in hope to enter the markets of the EU. Two dairy plants of Milk Alliance Company, one – of Terra Food Company, Zhytomyrskiy DP and a few more plants will be examined for compliance to the European standards. At the same time Ukrainian dairy products are absolutely not needed in Europe. Even the prices do not suit the market there. Milk powder and ordinary cheeses are cheaper in the EU, butter is not more expensive than in Ukraine. In any case it is not correctly to compare advantage of deliveries to the EU and to Russia even because Europe is large exporter of dairy products, and Russia is the largest importer in the world.

Kazakhstan was the best sale market for chosen Ukrainian producers, but recently a few domestic enterprises lost the permissions for deliveries to this country. Destiny of other suppliers is still not known.

Ukrainian exporters still did not lose a hope to renew deliveries of dairy products to Belarus. It is said the deliveries of at least milk powder, and whey powder, shortage of which is observed in Belarus, may be permitted soon.

Unfortunately, the government does not help Ukrainian exporters. The problem of deliveries to China still has not been settled. Officials try to renew (or not to cancel completely) the VAT subsidies for milk from the next year. Understanding hopelessness of the ban on sale of household-produced dairy and meat products from 2015, the authorities try to postpone it for two years.

It is good thing that there are some positive for dairy sector decisions, but financial support, at least minimal, is needed also. It worth mentioning that the purchases of milk powder and butter, announced in spring by Agrarian Fund, still did not come to logic end. Payments were not made.

Author: Vasyl Vintonyak, Director of INFAGRO