Business has appealed to the President of Ukraine regarding the situation on the feed market

14/ 07/ 2020

The European Business Association, the American Chamber of Commerce in Ukraine, and the Union of Ukrainian Entrepreneurs appeal to the President of Ukraine to resolve the situation on the pet food market in Ukraine. Until recently, Ukraine had a working registration system of finished feeds (a mandatory registration of every formulation of a finished product imported or produced in Ukraine). However, in January 2020, the Law on Food Safety and Hygiene came into force introducing a new system of registration of feed additives. Therefore, as for now, finished feeds may only be produced or imported into Ukraine if the used additives are listed in the State Register of Feed Additives which has not been yet established. Thus, for more than 2 years, business representatives have been emphasizing the need to recognize the equivalence of EU requirements for the registration of feed additives in Ukrainian legislation with the view to establish the abovementioned Register. However, the issue remains unresolved after these 2 years. There is no equivalence of the European registration system of feed additives to the Ukrainian one. This situation halts the supply of feed imported from the EU and causes significant revenue losses to the state budget, potentially depriving approximately 11 million pets of access to high-quality products. Thus, no updated or improved formulation of feed imported or produced in Ukraine may reach a Ukrainian consumer. Besides, consumers may lose access to specialized medicated feeds, which are often critical to maintaining animal health and life, but currently not offered by domestic producers. It is worth noting that the domestic pet food market is developing rapidly with the growing demand and product range, the expanding sales infrastructure which provides a large number of jobs. According to experts, last year the total pet food market amounted to more than 6 billion hryvnias, and in 2020 the market continues to develop. Thus, in 2019, the growth was 37.3%. Therefore, in 2020 the current situation may cost the state budget the losses in the amount of 260 million hryvnias from the value-added tax revenues and 40-50 million hryvnias from the income tax revenues. The business community has already appealed to the Prime Minister of Ukraine to help resolve this situation. Given the critical nature of the situation, the business community appeals to Volodymyr Zelensky, President of Ukraine, to pay due attention to this issue so that the necessary steps can be taken to resolve it. The business community developed appropriate proposals and shared its vision with the respective public authorities. There are currently 2 draft laws registered at the Verkhovna Rada which may solve the problem, namely: - Draft Law No.3672 “On Amendments to the Final Provisions of the Law of Ukraine On Food Safety and Hygiene to stabilize the feed market”, dated June 17, 2020; - Draft Law No.3318 “On Veterinary Medicine and Animal Welfare”, dated April 9, 2020, provided it includes the proposals that the business community had sent to the Verkhovna Rada Committee on Agrarian and Land Relations. The business community hopes that this issue will be resolved as soon as possible and that the deputies will support these draft laws, as both business and government have a common goal - to develop Ukraines economy and improve the business climate.

Until recently, Ukraine had a working registration system of finished feeds (a mandatory registration of every formulation of a finished product imported or produced in Ukraine). However, in January 2020, the Law on Food Safety and Hygiene came into force introducing a new system of registration of feed additives. Therefore, as for now, finished feeds may only be produced or imported into Ukraine if the used additives are listed in the State Register of Feed Additives which has not been yet established.

Thus, for more than 2 years, business representatives have been emphasizing the need to recognize the equivalence of EU requirements for the registration of feed additives in Ukrainian legislation with the view to establish the abovementioned Register.

However, the issue remains unresolved after these 2 years. There is no equivalence of the European registration system of feed additives to the Ukrainian one. This situation halts the supply of feed imported from the EU and causes significant revenue losses to the state budget, potentially depriving approximately 11 million pets of access to high-quality products. Thus, no updated or improved formulation of feed imported or produced in Ukraine may reach a Ukrainian consumer. Besides, consumers may lose access to specialized medicated feeds, which are often critical to maintaining animal health and life, but currently not offered by domestic producers.

It is worth noting that the domestic pet food market is developing rapidly with the growing demand and product range, the expanding sales infrastructure which provides a large number of jobs. According to experts, last year the total pet food market amounted to more than 6 billion hryvnias, and in 2020 the market continues to develop. Thus, in 2019, the growth was 37.3%. Therefore, in 2020 the current situation may cost the state budget the losses in the amount of 260 million hryvnias from the value-added tax revenues and 40-50 million hryvnias from the income tax revenues.

The business community has already appealed to the Prime Minister of Ukraine to help resolve this situation.

Given the critical nature of the situation, the business community appeals to Volodymyr Zelensky, President of Ukraine, to pay due attention to this issue so that the necessary steps can be taken to resolve it. The business community developed appropriate proposals and shared its vision with the respective public authorities. There are currently 2 draft laws registered at the Verkhovna Rada which may solve the problem, namely:

– Draft Law No.3672 “On Amendments to the Final Provisions of the Law of Ukraine” On Food Safety and Hygiene ” to stabilize the feed market”, dated June 17, 2020;
– Draft Law No.3318 “On Veterinary Medicine and Animal Welfare”, dated April 9, 2020, provided it includes the proposals that the business community had sent to the Verkhovna Rada Committee on Agrarian and Land Relations.

The business community hopes that this issue will be resolved as soon as possible and that the deputies will support these draft laws, as both business and government have a common goal – to develop Ukraine’s economy and improve the business climate.