12:16 28.12.2021

Milk producers ask president to fix gas tariff at UAH 32,000/1,000 cubic meters

2 min read
Milk producers ask president to fix gas tariff at UAH 32,000/1,000 cubic meters

Key Ukrainian milk producers have turned to President of Ukraine Volodymyr Zelensky with a request to set a tariff for natural gas at UAH 32,000 per 1,000 cubic meters, since its rise in price for 2021 from UAH 4,900/1,000 cubic meters to UAH 59,000-62,000/1,000 cubic meters made milk production unprofitable and could cause the halt of the industry's enterprises.

The corresponding open letter to the president was posted on the website of the Union of Dairy Enterprises of Ukraine.

According to the organization, in January 2021 the price for 1,000 cubic meters of natural gas amounted to UAH 4,900, while in January 2022 energy suppliers offer it to enterprises for UAH 59,000-62,000. Such a rise in the price of more than 10 times for the energy resource, which is accounts for about 25% of the cost of milk production, will lead to a deep crisis in the dairy industry and the impossibility of dairies to continue working.

"Milk processing enterprises cannot cover the extremely high gas tariffs by increasing selling prices for their own products, because the purchasing power of the population is at a low level. In addition, retail chains refuse to re-sign new contracts, which provide for a significant increase in prices for dairy products," the report says.

According to the organization, the energy crisis will lead to a reduction in production, while a number of dairies have already reduced the purchase of raw materials from agricultural firms.

"The effective intervention of the state can prevent such a threat, in particular, the establishment of a preferential tariff of UAH 32,000 per 1,000 cubic meters. The specified tariff will allow milk processing enterprises to continue producing dairy products and avoid a food crisis," it says.

The organization also noted that since 2013 the dairy industry has been in a crisis situation due to the devaluation of the hryvnia by 3.5 times, the reduction in duties on the import of finished dairy products from the EU, the elimination of the special VAT regime for milk producers and the rise in the cost of feed ingredients for cows.

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