A dime for milk

An old children’s rhyme springs to mind: “My little moo cow, give me some milk. How much do I owe you? Just a dime or two.” Today’s milk also costs “a dime or two,” especially for its producers. The other day Kharkiv region farmers organized a protest about this. The picketers carried placards reading “A real price for milk!,” “Stop robbing farmers!,” “What’s the use of the Year of the Countryside?” and adopted an appeal to the cabinet, warning about a “catastrophic situation in the agrarian sector, especially on the animal husbandry market.”

To crown it all, the Ministry for Agrarian Policies suggests setting minimal prices for animal husbandry products in 2007 and subsidizing them to ensure loss-free production. According to a draft government resolution, the lower limit of prices in 2007 will be UAH 8,770/ton for cattle; UAH 9,460/ton for pigs; UAH 9,160/ton for live poultry; UAH 8,500/ton for sheep and goats; UAH 1,225/ton for milk; and UAH 16,500/ton for wool.

The document also envisions state subsidies to farms next year for sold meat, premium and Grade A full cream milk, wool, honey-bee colonies, silk products, as well as for the identification and registration of farm animals. Farms are also slated to receive special subsidies for each dairy and beef cow added to the main herd, a ewe and a heifer over one year old, and to offset expenses that agrarian enterprises incurred when they bought heifers to replenish their herds.

The drafters of the document point to the unstable price situation on Ukraine’s animal husbandry market, noting that between January and May this year the average price for a ton of milk fell by 24 percent to UAH 960 per ton.

Meanwhile, the Ukrainian Agrarian Confederation (UAK) believes that the situation in the milk sector may be aggravated after the government introduces minimal purchase prices for milk. “In our opinion, setting minimal prices in these conditions without removing the economic prerequisites for a price reduction is a step that will only worsen relations between processing enterprises and milk producers and will in no way be conducive to eliminating the causes of price reduction,” the UAK statement says. The confederation believes that buying milk at administratively-set prices will result in dwindling sales of dairy products on the domestic and foreign markets, as well as in lowered output.

The UAK suggests that economic prerequisites be created to raise purchase prices. In particular, the sector will derive maximum benefit if the VAT is refunded to dairy product exporters.