The SMPU Committee on European Integration of the Dairy Industry of Ukraine is almost ready to present the draft Roadmap for European Integration of the Dairy Sector to the domestic dairy market operators for comments. The expected date is February 16.

Infagro asked Elizabeth Sviatkivska, Coordinator of the SMPU European Integration Committee, how the preparation for the publication of the draft Roadmap is going in one of the 11 groups, namely the one working on the section “Contractual relations and declarations by first buyers”:

What are the shortcomings of the current practice of concluding contracts between milk suppliers, processors and retail chains?

The main problem is the dominance of short-term contracts. With such contracts, it is difficult to plan development, invest in production or quality. Most contracts do not contain transparent pricing formulas, risk-sharing mechanisms, or liability for non-fulfilment of obligations. As a result, there are frequent price revisions and unstable supplies.

A separate problem is the relationship with retail chains. Delayed payments actually mean “interest-free lending” to retailers at the expense of processors and milk producers. As a result, this puts pressure on purchase prices and increases the risks of closure of both farms and processing plants.

Who is more satisfied with the existing model — milk producers or processors?

It is difficult to say for sure. The current model suits both parties to varying degrees, depending on the market situation. When raw milk prices rise, the current conditions become less favourable for processors; when they fall, then for milk producers.

Transparent and long-term contracts are beneficial primarily when the parties are ready to plan for several years ahead, develop, and attract investments. This is what is often lacking now.

There are no classic European dairy cooperatives in Ukraine. What European practices can still be applied in our conditions?

European integration is not only about formal compliance with legislative requirements. It is also about using those instruments that actually work in the EU and help regulate the market.

Regulation (EU) No. 1308/2013 offers flexible mechanisms that do not require a mandatory cooperative model. These are producer organisations and inter-branch organisations. They provide the opportunity to negotiate collectively, agree on contract terms, and make relations between milk producers and processors more transparent and predictable.

Long-term contracts have been talked about for a long time. Why are there so few of them yet — because of legislation, risks, or the reluctance of the parties?

In fact, a whole combination of factors is at work. On the one hand, unstable legislation and a lack of investment support instruments. On the other hand, very high risks: the war, labour shortages, logistical problems, and constant cost growth.

In addition, short-term contracts often seem more profitable at the moment — they allow you to respond to price changes quickly. The war has only intensified these trends, making long-term planning almost impossible for many operators.

What will the introduction of declarations of first buyers of raw milk change in practice? And how will it work?

It primarily aims to increase market transparency. The introduction of declarations is required under Regulation (EU) No. 1308/2013. First buyers of raw milk — processors, procurers, cooperatives — declare the volume of purchases and the average price they paid to producers every month.

The Regulation itself sets only a framework. Specific rules — in what form, how often and with what sort of responsibility — in Ukraine should be determined by the Ministry of Economy and the State Service for Food and Consumer Protection through secondary legislation. For producers, this means greater transparency in pricing; for the state, better market analytics.

Can the Roadmap on contracts and declarations motivate the market to change its approaches to contractual relations?

The Roadmap was not created as a tool for direct motivation for individual operators. Its task is to agree on a vision and the steps to be taken in the coming years to harmonise Ukrainian legislation with EU requirements, in particular Regulation No. 1308/2013, by 2028–2030.

The section on contracts and declarations of the first buyer sets the framework: mandatory written contracts, the possibility of collective negotiations through producer organisations, and regular reporting on volumes and prices. But the real readiness for change depends on the operators themselves. Not everyone will be able to meet the new requirements — for example, regarding milk quality or the control system, and not everyone is interested in this, especially small producers focused on the internal market.

Ukraine is strategically moving towards EU membership, and the Roadmap is a tool for systemic transformation of the sector. At the same time, it is obvious that without an industry-wide audit — an assessment of enterprise readiness, necessary investments, and transition periods — these changes will be difficult to implement in practice.