The 50% compensation introduced by the state for the cost of building and restoring livestock farms can become a powerful incentive for the revival of agribusiness in frontline regions. However, without insurance and the fight against counterfeit goods, its effectiveness will be limited. According to the estimation of Ukrainian dairy associations, up to 30% of the dairy market consists of gray imports and falsified dairy products.
This was stated on the air of "Yedyni Novyny" (United News) by Denys Marchuk, Deputy Head of the Ukrainian Agri Council (UAC):
"Frontline territories are particularly vulnerable: Russian shelling has destroyed many livestock farms. In the Kharkiv region, one UAC member suffered three strikes on a single enterprise. Due to high risks, agrarians cannot attract investments, and lending in the 'red zone' is almost non-existent. That is why the state compensation has become a signal to producers that they can continue to work, retain their workforces, and generate income for their communities."
Despite the compensation, a number of factors will continue to restrain farmers from investing. First and foremost is the lack of state insurance guarantees.
"The state compensates 50%, but farmers are forced to cover the other half with loans, as their own funds are insufficient. These 50% need to be state-insured—this would guarantee agrarians protection and confidence in business development," noted the Deputy Head of the UAC.
No less acute is the problem of market access. A portion of domestic demand is occupied by counterfeit dairy products, which are imported bypassing legislation and without paying taxes.
"Counterfeit goods narrow the opportunities for Ukrainian farmers to sell their own milk for processing. Because of this, procurement prices continue to fall—they have already decreased by more than 2.18 UAH. This is practically the limit of profitability, and for smaller producers, it's already a loss. Without clearing the market of counterfeit goods, the compensation program will not be able to fully realize its potential," explained Denys Marchuk.
Press Service of the Association of Milk Producers Based on materials from Agravery.com
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