Part of the new Ukrainian government agricultural policy was to cancel milk subsidy per liter sold and to transfer support on a per head basis. Now that the policy has come into force dairy processors can no longer collect the subsidy, and pass it on through the price for milk paid. Instead, dairy processors have now lowered milk prices and cow owners will need to apply to receive the subsidy at year end. Given that majority of cows owned are held by subsistence farms who will now need to apply for a support payment at year end, it is unlikely these applications will proceed. Also as the subsidy was based on an automatic refund of VAT on sold milk the government plans to take a third of the VAT refunds and provide it as direct support to animal production it supports. We expect the same level of transparent support in the milk sector as is now the case in the grain market. There the government creates public corporations at taxpayer expense and then gives away shares to anonymous private individuals at no cost.

UkrAgroConsult