News
28.02.2013
Minimal milk prices set to decrease cow population by 5%
Another legislative initiative of the Parliament to set minimum purchase prices for raw milk can trigger the growth of milk imports, increase illegal dairy production in Ukraine and reduce cow population in households. The Draft Law # 2297 "On Amendments to the Law of Ukraine "On state support of agriculture" concerning the set of milk procurement prices, under which the Cabinet of Ministers of Ukraine is provided with the right to regulate and set minimum prices for raw milk, releasing the Agrarian Fund from a duty to form an intervention milk fund.
The Association "Ukrainian Agribusiness Club" reports that in Ukraine about 78% of milk is produced by households, which results in high seasonality and cost of milk. Thus, in 2012 agricultural companies produced only 2,5 mio t of milk from 11,38 mio t of general milk production. Quality and prices of milk processing plants remain relatively high throughout the year and remain competitive in comparison with dairy producers in neighboring countries. In winter period of 2012-2013, milk is purchased at a price of 3,5 - 4,6 UAH/liter.
"As for prices in households, the mass sale of milk from May to August, causes price collapse in the market due to significant excess of supply over demand in this period. Therefore, the set of minimum fixed prices will leave at least 500 thousand t of milk beyond demand, which would reduce cow population at least by 5% in one year," - UCAB advisor on agricultural markets Elisabeth Svyatkivska says.
In 2012, for industrial processing 4.7 mio t of milk were supplied, but with the introduction of minimum prices, the milk volume for processing may reduce to 4 mio t. At that the possible loss of export markets in the case of minimum prices set could not be compensated by increasing domestic consumption due to the limited payment capacity of the population. UCAB emphasizes that a more acceptable regulation option would be the creation of legislative conditions for family farms development and promotion of cooperatives’ development, which would help to solve the problem of price lowering in summer and provide profitable and competitive milk production in households. Comments and suggestions of UCAB on this Draft Law are enlisted in the letter to the Parliament.
Association "Ukrainian Agribusiness Club"
Velyka Zhytomyrska str., 20 А, office 53, Kyiv, 01001
Phone: +380 44 201-4950
Fax: +380 44 201-4951
099 272 59 30
Tetiana Kotyk
www.agribusiness.kiev.ua
The Association "Ukrainian Agribusiness Club" (UCAB) www.agribusiness.kiev.ua was founded in 2007 to protect the economic and professional interests of players of agribusiness in Ukraine. UCAB is a unique platform in Ukraine for establishing business contacts between the leaders of agribusiness, improvement their work and dialogue with the government. UCAB actively supports Ukrainian producers in establishing and maintaining international business relations. The Association consists of the largest producers and processors of agricultural products in Ukraine.
