Ukrainian Cabinet plans to save dairy companies by means of a memorandum
European Bank for Reconstruction and Development (EBRD), UN Food and Agriculture Organization (FAO), Ukrainian Ministry of Agrarian Policy and Food and associations of dairy processors and milk producers signed a Memorandum on cooperation on Tuesday. A similar memorandum was signed in 2011 with private grain traders and helped to solve some vital problems of the market, i.e. to lift ban on grain export and make the dialogue with the Cabinet of Ministers more transparent. Dairy memorandum is destined to have the same effect.
It is supposed to create a working group; questions of investment potential, dairy enterprises modernization, raw milk quality increase and general standards raise will be a part of its duties. The group will also take part in dairy products promotion and acceptable for producers and processors price assessment.
Along with those who support the memorandum, there are opponents. According Alex Lissitsa, President of the Ukrainian Agribusiness Club (UCAB), Ukrainian dairy sector is in a bad way: frequent legislative amendments, low milk prices and expensive loans make it unattractive for investors. But the memorandum is unlikely to help the industry, because grain and dairy markets differ a lot. The latter is less attractive for investors as the payback period is longer – 7-10 years.
In 2012 milk production grew 2.7% to 11.4 mln tones – for the first time in recent years; but it is still half the volumes produced in 1991.
