VADYM CHAGAROVSKY, Board Chairman Dairy Union of Ukraine: What to do to save the country’s dairy industry

In 2019, production of domestic dairy products decreased by 5-6%.  The reason is a set of crises in the dairy industry.

The current crisis is the predicted result of our government’s inaction in the years of independence.  Support for dairy cattle breeding in our country was minimal.  To stop the decline in milk production and reduction of  dairy consumption integrated approach is needed.

There should be provided a strong government support for dairy, designed for a minimum of 5 years.

It is necessary to provide financial assistance to the owners of MTF to increase the number of livestock and introduce a 50% cost reimbursement.  The cost of construction and modernization of dairy farms and milking halls should also be reimbursed.  For the development of dairy cattle, a reasonable amount of livestock for 100 hectares should be established.  In 2020, the minimum figures of support needed for dairy cattle are UAH 100 million to increase livestock number and UAH 1 billion to reimburse construction and modernization costs.

The second issue that the state should pay attention to is dairy processing industry.

For dairy processors construction and renovation should be also reimbursed for the five year term. In addition, compensation is required for the loan interest rates that will be used to modernize businesses.  In 2020 it is necessary to provide UAH300 million for compensation of construction costs and UAH100 million for compensation of interest rate of investment loans.

The state support should not only be financial but also in the form of specific solutions that will enable dairy enterprises to modernize effectively.

For example, for this purpose it is necessary to cancel VAT for imported equipment, or at least to delay the payment of VAT for the period of depreciation of this equipment.

In addition, in order to protect Ukrainian dairy market and support dairy industry, it is necessary to introduce “mirror” quotas with EU countries.  All civilized countries of the world take such steps to protect domestic producers.  For example, the US has introduced a dairy import quota of 2% of the total market.  Turkey has imposed tariff restrictions on imports of dairy products from 20 to 180%.  The state also needs assistance in promoting our dairy products for export.

It is necessary to create a working group of professional associations and to develop a five-year national program of development of the dairy industry of Ukraine.

If we do not take effective steps to save the industry today, in a few years Ukrainian market will be filled with imported products.  And in fact we, as consumers, will develop the dairy industry of European countries, not our own.  This situation, in the near term, will lead to the fact that many businesses will not be capable to compete, they will close.  As a result, we will get job cuts not only in the dairy industry but also in related industries and this means hundreds of thousands of jobs.

Latest news: