Ukraine's dairy industry to benefit from retaliatory steps to restrict imports from EU states –Director of Dairy Enterprises Union
If Poland and some other EU states impose a ban on the supply of Ukrainian dairy products, then Ukraine's retaliatory measures will be beneficial for the domestic dairy industry, Executive Director of the Union of Dairy Enterprises of Ukraine Arsen Didur has said.
"Look at the statistics. In the first quarter of 2023, Poland supplied dairy products to Ukraine for $25 million a month, and Ukraine for $5 million. If Ukraine introduces retaliatory measures, then Polish producers will lose these amounts, and we will simply pick them up and won't have problems with the sale of dairy products within the state," he said in an interview with Interfax-Ukraine.
In his opinion, the volumes of supplies of grain and dairy products from Ukraine to the European market should not be confused since the domestic dairy industry is not a serious competitor with dairy products for European producers.
"If Ukraine closes imports in response to the ban, this will be the best gift for milk processing. The best support for the dairy industry in recent decades, which the state has never particularly supported," Didur said.
He said that the top five importers of Ukrainian dairy products – Italy, Poland, Germany, the Netherlands, France – supplied their dairy products to Ukraine for $300 million in 2021, and 50% of these supplies were from Poland. According to him, in 2022, due to the war and fear of supplies, imports fell to $200 million.
According to Didur, even after the increase in supplies in 2022, the share of Ukrainian dairy products in the markets of European countries did not exceed 1%, with the exception of Poland, where Ukrainian producers reached a figure of 7-7.5% in the second half of last year, and the Baltic countries – around 5%.
"But I want everything to end with normal agreements, and we come out of the situation with our heads held high," the head of the union expressed hope that the parties would refuse to introduce restrictive measures.
Speaking about the situation in the industry, he said that if before the war 180 enterprises processed milk in Ukraine, now about 130 are actively working.
"Among the losses of last year, we should mention the Danone plant in Chaplynka in Kherson region, the plants in Dniprorudny, Molochansk and Melitopol. The plant in Bashtanka suffered less – its equipment was taken to other enterprises," the head of the union said.
According to him, 2023 will be a very difficult year.
"Greetings" are constantly arriving even from those from whom they were not expected, and global economic turbulence is added. I do not rule out that enterprises that have not yet been modernized, have not kept pace with the times, may leave the market. But their raw material base will be picked up by other plants. It would not be a problem," Didur said, describing the situation.
He said that in 2022 Ukraine produced about 7 million tonnes of raw milk, of which 10% remained for producers for their own consumption or the population processed it on their own.
"Another 50% went into shadow circulation – it is how processors call the turnover of dairy products that operate outside the veterinary service and avoid paying taxes. The rest went to official processing – about 2.7-2.8 million tonnes," the expert added.
According to him, last year there were enough raw materials to fully satisfy consumers in the domestic market and ensure exports, which grew by 45% compared to 2021 due to a decrease in population and the loss of occupied territories.
In general, according to him, Ukraine has been producing 7.5 million tonnes of milk per season in recent years, while at the dawn of Ukraine's independence it were 27 million tonnes.
"In order for Ukraine to be a successful leading producer of dairy products, it is necessary to produce 15 million. This will provide, firstly, a different cost of the finished product, and secondly, there will be an export potential that will help to participate in global international programs," the head of the union said.
Among the promising export markets, he named Africa, where Ukraine used to be well known, supplying products to Libya, Algeria, and Morocco.
"Therefore, the most important thing is to invest in raw materials so that there is something to process," Didur said.
According to him, even in the conditions of the war, Ukraine was able to preserve the traditional markets of Central Asia, where it supplied the cheese product, condensed milk and powdered milk. At the same time, the closure of the Black Sea increased the delivery time to about 45 days and increased the cost of logistics.
"So the markets are not lost, they have become less profitable," the director of the union said.
He also said that last year there were export deliveries of milk powder to the Philippines and Malaysia, China willingly buys Ukrainian whey powder, and there is experience of working even with countries such as Mexico and Puerto Rico.