The industry tax and the reduction of the VAT rate for dairy farmers will improve the situation in the industry. This opinion was expressed by Deputy Сhairman of the UAC Dmytro Kokhan during the Milky Forum 2023.

The Ukrainian Agri Council joined the initiative of the Association of Milk Producers and took an active part in the development of two draft laws: on the sectoral levy among dairy producers in the amount of 0.5% of sales and on reducing the VAT rate on milk and dairy products to 10%. Both draft laws are intended to improve the situation in the dairy industry.

To introduce an industry tax, draft laws No. 9162 and No. 9163 need to be adopted. They create the conditions and enable industry representatives to unite into a producer organization (at least 50% of the market must be united) and decide to collect an industry fee to finance programs to promote innovations in milk production and processing, programs to popularize and export dairy products, which will become mandatory for all market participants. These funds can be further used for any of a very wide range of programs and measures for the development of the industry, but it will be up to the industry participants to decide where to allocate the funds through the supervisory board formed in the producers' organization.

"We meet every year and complain about the stagnation of the industry and the lack of support from the state for dairy farmers. To change the situation, we have initiated and developed a package of draft laws that give us the opportunity to unite into a kind of "dairy union", make decisions and start collecting industry contributions and use the accumulated money to develop the dairy industry. I emphasize that the draft law does not establish a requirement to pay the industry contribution, but only creates a legal condition and mechanism for the industry to unite and make such a decision. The business itself will decide where to allocate the funds by voting in the producer organization. This may include: popularization of milk consumption (as a product, not a separate brand), funding for development, research and technology, organization of forums, development and lobbying of laws, export promotion, etc.", said Dmytro Kokhan.

He added that the practice of industry tax is widespread in the United States, Canada, India, and other countries. 

Hanna Lavreniuk, General Director of the Association of Milk Producers, supported the draft laws on the sectoral levy and VAT reduction in the dairy industry. To do this, it is necessary to adopt the draft law No. 9161.

"Regarding the draft law on reducing the VAT rate, its provisions are aimed primarily at reducing the share of the "shadow" milk market. Currently, in order to avoid paying taxes, about 37% of raw milk is processed illegally, is not accounted for and, accordingly, is not taxed. It will also help us to contain the risk of rising prices for milk and dairy products and keep them affordable for the majority of our consumers. 

The criticism of the draft law that retailers will take advantage of the VAT reduction and take the entire discount is well-founded, but we have another draft law on trade pending adoption that should prevent unjustified markups and create competition among supermarkets that will independently regulate prices for dairy products," said Hanna Lavreniuk.