UKRAINE – Ukrainian lawmakers are working on a new policy that could ease tension in the bartered dairy industry as the country tries to pull resources that will help revitalize the industry.

The dairy sector is the number two agriculture industry in Ukraine, second behind grain and oilseed production.

Taras Vysotsky, deputy minister for the development of the economy, trade, and agriculture of Ukraine, said agriculture accounts for 20% of the nation’s GDP.

Arsen Didur, chairman of the Ukrainian Dairy Union, told the local newspaper Telegraph that the milk processing segment has recently entered the worst period since the beginning of the Russian invasion.

“Consumer outlook is bad. Exports have almost stopped,” Didur said, attributing this, among other reasons, to some mistakes made by the Ukrainian government in bilateral customs relations with the countries of Central Asia–Uzbekistan and Turkmenistan.

He also listed expensive raw materials compared to the European Union, a lack of state support, and hard access to bank loans, Ukrainian dairy manufacturers experience delays in payments from retail chains, among other factors which have a major impact on the Ukrainian dairy industry.

In trying to combat some of the mass bankruptcy in the sector, Verkhovna Rada, the Ukrainian Parliament, has recently registered new bills to ease tensions in the troubled dairy industry.

The Parliament proposes halving the VAT rate on domestic and imported dairy products to 10%. Nikolai Solsky, the Agrarian policy minister, stated that the new bill should help legal companies in their struggle against the shadow segment.

He expressed confidence that when the bill is signed into law, dairy producers who do not pay taxes will lose part of their profits, Dairy News reports.

In addition, Ukrainian authorities plan to establish a commodity checkoff program, obliging market participants to pay 0.5% of revenue to a specially established fund designed “to promote dairy products, push forward innovations, combat falsification, and develop new production standards.”

“This will allow the state to transfer part of the functions with which industry representatives will cope better than anyone else,” Solsky explained.

He added that this scheme is like the one adopted in the US, promising that it would be put in place only if Ukrainian dairy producers express interest in it.

Even now, with fighting ongoing, UkraineInvest, Kyiv’s investment promotion office, is attracting interest. The office has nearly 20 projects worth US$2.3 billion running already and expects US$3 billion to US$5 billion in investment over the next two years in the industry alone.

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