Introduction of minimum purchase price of milk from households to result in reduction of dairy producers

Kyiv, May 30 (Interfax-Ukraine) – The introduction of minimum purchase price of milk at the level, which is higher than market prices, will result in the fact that producers will stop buying milk from households, and this could lead to a monopoly forming on the dairy market in time, President of the Association of Milk Producers of Ukraine said at a press conference at Interfax-Ukraine on Wednesday.

"Attempts to regulate the prices of milk explained by the need to increase the social protection of households will result in the opposite effect," Lana Sinichkina, the co-chairperson of the committee for food industry at the American Chamber of Commerce in Ukraine, said at the press conference.

The director for cooperation with the state authorities at Danone in Ukraine, Serhiy Movchan, said that producers will prefer to buy milk from companies whose core business is milk production, and which have the facilities to refrigerate milk.

He also said that Ukrainian dairy products will become uncompetitive both on the foreign and domestic markets due to the increased price. Products with a longer expiration period will be imported, and there will be a need only for the production of dairy products with a short expiration period.

Board Chairman of the National Association of Milk Producers of Ukraine Ukrmolprom, Vasyl Bondarenko, said that for example, if the minimum purchase price of milk will be UAH 3, the price of milk for consumers would grow by 17-20%, and the price of butter by 30%.

The experts addressed lawmakers asking to remove Requirement 16-1, which allows the regulation of the purchase prices of milk in Ukraine, from the draft law on amendments to the law on milk and dairy products, which has been passed at first reading.