Due to the lack of proper state support, Ukraine is deepening into a milk crisis. In addition to the rapid loss of cows and reduced production, the country has fallen to the status of a net-importer of dairy products.

The way out of this situation is the implementation of the National Strategy for the Development of the Dairy Industry 2021-2030, developed by the Ministry of Economy in dialogue with industry associations. This was discussed today during the press conference "State Budget 2021: what are the threats to the dairy industry?", organized by the Association of Milk Producers.

According to the words of Vice President of the Association of Milk Producers Anna Lavrenyuk, if in 2018 Ukraine earned on dairy products, in 2019 the milk equivalent has already imported 500 thousand tons of dairy products. In 2020, in just 9 months, imports amounted to 218 million dollars and by the end of the year its total amount, according to analysts and market experts, in terms of milk equivalent will reach 1 million tons of raw milk.

"In 2017, abolishing the special VAT regime for agricultural producers, the government undertook to allocate at least 1% of "agricultural” gross domestic product (GDP) by 2021 for state support programs for agriculture - that is about UAH 7 billion. We never had such an amount of state support,” Anna Lavrenyuk said.

Despite the deep crisis in the dairy sector, the state budget for next year the support fund for agricultural producers increased by only UAH 500 million (it means up to UAH 4.5 billion). This is incomparably less that was proposed by the Ministry of Economic Development and Trade of Ukraine, supported by the Verkhovna Rada Committee on Agrarian and Land Policy and expected by industry representatives.

AMP Vice President emphasizes: “If UAH 1 billion is allocated for animal husbandry, it will mean that we will not use the potential we have today. Funds provided for state support already show that they are not enough. UAH 300 million is set aside in the budget for 2020 to reimburse the cost of breeding resources, and 380 million applications have been set aside nowadays. That means, all farms that relied on support will receive a proportionally lower amount.”

The Union of Dairy Enterprises Board of Directors Chairman Vadym Chagarovskyi noted that the crisis situation which is in the dairy industry has a major factor - the lack of government officials’ vision of the importance of the dairy sector for economic development.

"To support the dairy sector, it is necessary to invest UAH 90 billion over 10 years. Today, Ukraine actually produces 6 million tons of milk, instead of 9.6, according to the SSUFSCP. In order for our nation to feel provided with domestic dairy products, it is necessary to produce 10 million tons of milk. Only in this case all needs of the domestic market will be supplied and Ukraine will regain the status of an export-oriented country," Vadym Chagarovskyi said.

Board Deputy Chairman of the Ukrainian Cooperative Federation Zinovii ​​Svereda mentioned that the agricultural sector should become a priority of Ukraine's state policy:

"Without a quality village there is no quality city, ecology, food, health. When we have the right reinvestment policy of the state in our own development, we will be able to solve many accessory and direct threats for Ukrainian villages, which fade every day. We appeal to the heads of state: agriculture is your personal security," Zinovii Svereda said.

Ukrainian Agri Council (UAC) Deputy Chairman Mykhailo Sokolov said that the agricultural sector and the dairy industry in particular need more financial and legislative support.

"If we look at the European Union, in particular how many subsidies are allocated per hectare, we would need to allocate about UAH 400 billion a year to match them. And we have a total of 4 billion and one billion for livestock. This is an extremely small amount. But if we think that the situation is deplorable only in relation to the European Union, then this is not everything. Similarly, the agricultural sector is good subsidized in the Russian Federation and Belarus. Maybe twice less than in the European Union, but it's still 50 times more than in our country," Mykhailo Sokolov mentioned.

However, the expert said, there are steps that do not require even money, but the usual attention to the industry. For example, the adoption of a law to strengthen the fight against dairy products counterfeiting. Unfortunately, the Verkhovna Rada has not been able to consider it for the last 5 years. Similarly, over the past few years, there has been talk of reducing the value added tax (VAT) rate on finished livestock products. However, all this time the issue is not resolved. Although across Europe, a reduced VAT rate applies to all food products.

The Association of Milk Producers calls on the Cabinet of Ministers, which is now in charge of amending the text of the document before the second reading, to make the right final decision on the livestock sector financing in general, and the dairy sector in particular. After all, without proper support, it is unreal to bring the dairy industry out of the crisis.

The National Strategy for the Development of the Dairy Industry will make it possible to increase milk production from industrial farms to 10 million tons. Besides, it will help to transform the homestead sector into family dairy farms, agriculture enterprises, become transparent for control and guarantee the safety and quality of raw milk.

Each additional ton of raw milk produced in the dairy industry is 15 thousand new jobs in dairy farming and 135 thousand - in related industries, UAH 10 billion of deductions from salaries to the budget, an additional 160 thousand cows, new dairy farms.

Dairy sector support is not a loss or a cost to the economy, but an extremely profitable investment. Therefore, worldwide animal husbandry is actively supported at the state level.