Dairy

12/ 07/ 2012

As a result of EBA Dairy Committee’s lobbying efforts on 5 July 2012 the Parliament’s Committee on Agrarian Policy and Land Issues has returned the Draft Law on Amendments to Certain Laws of Ukraine Regarding Stimulation of Dairy and Meat Breeding Development No 10198 registered on 15 March 2012 for further improvement. Background: on 15 March 2012 the Draft Law No 10198 on Amendments to Certain Laws of Ukraine Regarding Stimulation of Dairy and Meat Breeding Development (further – the Draft) was registered in the Verkhovna Rada of Ukraine. While the main objective of the Law was declared as the support of the Government’s activities in the development of domestic cattle breeding, increase of cows amount and milk production, legislative reinforcement of state subsidies for milk and meat production, creation of favorable conditions for the construction of new milk and meat farms and complexes, a number of Draft’s provisions evoked big concerns among EBA Dairy Committee members. In particular, the Draft envisaged the completion of the list of goods subject to state price regulation by the term “milk”. However, since the mentioned definition means both raw milk and a ready good for consumption, it was not clear which milk was meant. On the other side, the list of goods subject to state price regulation includes primary goods (for further processing) which are purchased by the Agrarian Fund of Ukraine with the objective to establish the equilibrium price on the market and raw milk cannot be in the list of such goods due to the short storage period. Also, the Draft envisaged the limitation of the trade mark-up by no more than 10% of wholesale producer’s price (customs value) for the goods subject to state price regulation. This norm would be non-applicable for the raw milk as it is not meant for the sale to end consumer. Furthermore, the limitation of dairy processors’ profitability by no more than 10% foreseen by the Draft, was a very questionable provision as price regulation issues are regulated by the special legislation and cannot be done via amending the Law of Ukraine “On State Support of Agriculture”. The EBA Dairy Committee took efforts to communicate the above-mentioned concerns to the responsible authorities through the relevant letters and meetings, in particular, through close cooperation with the Ministry of Agrarian Policy and Food of Ukraine. We are happy to announce that EBA’s comments and recommendations were taken into account and the Draft was not supported by the Parliament’s Committee on Agrarian Policy and Land Issues and sent for further improvement. This means that the Draft should not be put for the Parliament’s consideration without the relevant amendments.

As a result of EBA Dairy Committee’s lobbying efforts on 5 July 2012 the Parliament’s Committee on Agrarian Policy and Land Issues has returned the Draft Law on Amendments to Certain Laws of Ukraine Regarding Stimulation of Dairy and Meat Breeding Development No 10198 registered on 15 March 2012 for further improvement.

Background: on 15 March 2012 the Draft Law No 10198 on Amendments to Certain Laws of Ukraine Regarding Stimulation of Dairy and Meat Breeding Development (further – the Draft) was registered in the Verkhovna Rada of Ukraine. While the main objective of the Law was declared as the support of the Government’s activities in the development of domestic cattle breeding, increase of cows amount and milk production, legislative reinforcement of state subsidies for milk and meat production, creation of favorable conditions for the construction of new milk and meat farms and complexes, a number of Draft’s provisions evoked big concerns among EBA Dairy Committee members.

In particular, the Draft envisaged the completion of the list of goods subject to state price regulation by the term “milk”. However, since the mentioned definition means both raw milk and a ready good for consumption, it was not clear which milk was meant. On the other side, the list of goods subject to state price regulation includes primary goods (for further processing) which are purchased by the Agrarian Fund of Ukraine with the objective to establish the equilibrium price on the market and raw milk cannot be in the list of such goods due to the short storage period.

Also, the Draft envisaged the limitation of the trade mark-up by no more than 10% of wholesale producer’s price (customs value) for the goods subject to state price regulation. This norm would be non-applicable for the raw milk as it is not meant for the sale to end consumer. Furthermore, the limitation of dairy processors’ profitability by no more than 10% foreseen by the Draft, was a very questionable provision as price regulation issues are regulated by the special legislation and cannot be done via amending the Law of Ukraine “On State Support of Agriculture”.

The EBA Dairy Committee took efforts to communicate the above-mentioned concerns to the responsible authorities through the relevant letters and meetings, in particular, through close cooperation with the Ministry of Agrarian Policy and Food of Ukraine.

We are happy to announce that EBA’s comments and recommendations were taken into account and the Draft was not supported by the Parliament’s Committee on Agrarian Policy and Land Issues and sent for further improvement. This means that the Draft should not be put for the Parliament’s consideration without the relevant amendments.

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