XIV International Dairy Congress took place in Ukraine
On June 1 and 2, 2021 dairy producers, suppliers of equipment and technologies, government officials gathered together to discuss how they can create an efficient supply chain in the dairy sector and what is to be done to overcome major challenges in it.
The event was organized by the Association of dairy producers of Ukraine, All-Ukrainian Agrarian Council, and company Dykun with support from IFC project “Development of dairy industry of Ukraine”, and the Swiss-Ukrainian program "Development of trade with added value in the organic and dairy sectors of Ukraine".
Main challenges the Ukrainian sector is currently facing are: reduction of cattle population and overall local milk production, increasing imports of dairy products from the EU, forthcoming opening of the agricultural land market, and the changes in the animal welfare regulations. But both local and international experts
According to Hanna Lavreniuk, the vice-president of the Ukrainian Association of Dairy Producers, the sector is undergoing structural transformation with capacity being shifted to intensive industrial production. Last year 80% of milk supplied for processing came from the industrial farms.
Reduction of cattle and therefore milk production takes place not only in the backyard, but also in the industrial sector. Overall milk production is estimated to be less than 9,2 mln. tons (6,5-7 mln. tons according to the estimations of dairy processors). Only 3,51 mln. tons of milk was supplied for processing in 2020, which is 7,9% less than in 2019. In 2020, around 100 agricultural companies stopped their dairy farming operations in Ukraine. According to the poll conducted among the participants of the event, 42 % of dairy companies reduced their headcount last year. Main problem of such reduction was unpredictable agricultural policy.
As of May 2021, Ukraine had 3,25 mln of cattle, of which 1,67 mln heads of cows (424 thousand dairy cows at the industrial farms). This is not enough to produce enough organic matter to support processes of replenishing soil fertility.
Local processing also goes down, facing lack of local supply of raw materials and high farm milk prices (0.40 Euro cents if calculated to EU fat and protein standards). At the same time, the purchasing capacity of the local population does not increase. It is expected that in the near future 20 local processing companies will be closed down. Supermarket chains choose to buy cheaper dairy products from the EU. 30% of dairy products sold in Ukraine were imported in 2020. This tendency only increases this year. In January-April, Ukraine imported cheese worth USD 120 million, while for the same period of last year imports amounted to USD 90 million.
According to the Head of the Ukrainian Union of Dairy Processors, Vadym Chaharovsky, last year Ukraine imported dairy products worth 300 mln. USD, while export was only 175 mln. USD, so the country has become a net importer of dairy products. Total imports of dairy products can be re-calculated to around 1 mln. tons of raw milk. If produced in Ukraine, this milk could generate 15 thousand jobs in animal breeding and 135 thous. workplaces in dairy processing. The dairy processors urge the government to protect the local market against aggressive import.
The transformation of small scale (backyard) milk production is also taking place. There are around 100 newly created family farms in Ukraine, primarily boosted by activities and support of the UkrMilkInvest processor. This contributes to improvement of the quality of milk supplied by small farmers. Milk quality standards (EU Regulation 853/2004) will be brought into force stage by stage before 2024. Newly created family farms, however, face the problem of the lack of land for growing their feed.
Larger agricultural companies-milk producers are concerned with the forthcoming introduction of the land market and complain on the lack of the long-term government strategy aimed at supporting the development of the dairy sector.
The recently adopted “Law on veterinary medicine and animal welfare” will introduce in Ukraine the EU animal welfare standards for all cattle management at all farms gradually before 2026. This will mean extra investments from the producers and more transformations.
As the Minister of Agrarian Policy Roman Leschenko announced to the participants of the congress, the re-established in May 2021 Ministry of Agrarian Policy and Food of Ukraine is now shaping a program for development of the livestock industry. The aim is to increase the annual milk production to 6 million tons in the industrial sector and 2 million tons in the family farms. Minister also announced that there is an initiative to introduce changes in the legislation to reserve more land for animal breeding.
The Ministry of Agrarian Policy will support the introduction of safeguard measures against imports of certain groups of dairy, primarily of cheese products. This request was initiated by 14 dairy processing companies earlier this year. The decision will be taken by the special commission of the Ministry of Economic Development, Trade and Agriculture.
To support the agricultural producers, the Ukrainian government launched programs to improve access to finance. Within the framework of the program of portfolio guarantees launched by the Ministry of Finance of Ukraine in 2020, as of May 1, 2021, UAH 2.5 billion was used, including 30% of loans issued to agricultural companies, First Deputy Minister of Agrarian Policy Taras Vysotsky reported at the Congress. According to him, after the exhaustion of the allocated money, additional line of state guarantees for UAH 10 billion, is foreseen in the state budget for 2021. Vysotsky said that these funds will be sufficient for the portfolio guarantee program.
Deputy Minister announced changes to the program that would halve the amount of collateral for getting loans by the agricultural producers. The deputy minister gave an example, according to which those wishing to build a dairy farm worth UAH 100 million pledge property to a bank participating in the government program in the amount of 50% of the requested loan. Earlier the portfolio state guarantees program implied a collateral of 100% of the amount required by a business entity.
To a large extent, Congress was about networking, knowledge and experience sharing. The farmers, government representatives and sector experts discussed means to support milk producers, to guarantee milk quality, and improve production technology. According to the results of a poll conducted among the participants, for 62% of them dairy production is viewed as an important business, for 24% it is the activity to provide jobs and create loyalty from the landowners. Important is that according to the conducted poll, participants of the congress do not plan to reduce investments to dairy production.
Representatives of the Dutch companies: Difco International, VDK Agri and Trioliet (Ukrainian dealer Agroinmash Ltd.) presented their products and services at the special exhibition stands, the company Cehave Korm was an active participant of the event, and the expert from “Rozvolozhzhya” successful dairy farm with Dutch ownership shared their experience of using digital farming technologies with the Ukrainian farmers of a special seminar of farming technologies.
More: International Dairy Congress, Facebook page of Dairy Congress.