The Union of Dairy Enterprises of Ukraine (UDMU) and the Polish Polish Dairy Chamber (Polska Izba Mleka) call on their governments to actively address the dairy sector of both countries, which arose due to political turmoil in spring 2023, while respecting the principles of free trade.

“We want to express our concern about what is happening to the dairy sector right now. We, as an industry, want to ensure that our firms and our farms are continually operating for our consumers. We don’t want small groups that are not connected to the dairy sector to complicate our relations,” Agnieszka Maliszewska, director of the Polish Dairy Chamber (Polska Izba Mleka), said Friday at the first Ukrainian-Polish Dairy Dialogue, which was held at Interfax-Ukraine.

The executive director of UMSU Arsen Didur reminded that since June 2022 the European Union had abolished all customs duties and quotas for Ukrainian products for a year, which was of mutual benefit to the economies of Poland and Ukraine, and the dairy sector in particular, so this regime has been extended for another year.

The executive director of the SMPU expressed regret that since April 2023 in relations between Ukraine and Poland “some incomprehensible actions began to occur. “These events have not benefited our brotherly relations and trade relations as well,” he stated.

Didur said that representatives of the Polish and Ukrainian dairy sectors do not intend to remain indifferent to what is happening and have developed a single coordinated position, insisting that any unlawful interference in business does not benefit either party.

“Although Poland has a stronger position in the mutual trade of dairy products, the LSU is categorically against the interference of the two governments and the creation of problems in free trade. We do not accept both the ban on deliveries of Ukrainian dairy products to Poland and the creation of any additional veterinary control from the Ukrainian side. All actions of the governments should be based on the principles of democracy, free trade and the rule of law”, – emphasized the executive director of UMSU.

Industry associations of Poland and Ukraine have invited leading experts from both countries for a dialogue to unveil the results of the two countries’ trade in dairy products during 2022-2023 and to show the groundlessness of any restrictions on trade between the two countries.

An analyst at the International Food & Agri Hub BNP Paribas Poland Pawel Wierzykowski said that before a full-scale invasion of Ukraine by Russia in 2021, Ukraine was the third largest market for Polish dairy products with a share of 5% after Germany (19%) and the Czech Republic (7%). In particular, 10.5% of all exports of Polish cheese and cottage cheese, 5.3% of yogurt and 3.4% of butter were sent to Ukraine.

According to the Polish expert, in 2022 the share of exports of dairy products from Poland to Ukraine has decreased to 3.3%, but the Ukrainian market still remains a very important export vector for Polish dairy products outside the European market.

In monetary terms, export of dairy products from Poland to Ukraine in 2022 decreased by 13% compared with the prewar year 2021 – down to EUR 108 million. In 2022 Poland reduced the supply of whey to Ukraine by 32%, cheese – by 31%, milk and sour cream – by 28%, while at the same time increased the supply of yogurt by 3%.

At the same time for 4 months of 2023 a positive tendency was observed and the export of Polish dairy products to Ukraine increased, – said Wierzykowski.

He noted that Poland is the largest European supplier of dairy products to Ukraine with 50% presence. In particular, in the structure of European supplies the share of Polish products in Ukraine reaches 79% for milk and sour cream, 79% for yogurt, 72% for cheese, 51% for curd, 44% for whey powder and 15% for butter.

The expert does not consider the decrease of the trade balance by three times in 2022, to EUR43 million compared to EUR121 million in 2021, as this figure was EUR42 million in 2020 and the minimum level of EUR6 million was recorded in 2015.

According to his information, similar fluctuations were observed when Poland joined the EU, when specialists from Germany and Poland could not predict the consequences of opening markets, but markets reacted adequately and the situation leveled off within a few years.

The expert of the Institute of Agrarian Economics Leonid Tulush thanked representatives of Polish dairy products for the fact that they gave Ukraine the opportunity to sell surplus dairy products, which were formed in Ukraine due to the outflow of main consumers, in particular to Poland.

“Since the beginning of 2023, in five months the situation in the Ukrainian-Polish trade balance of dairy products has radically changed. In the first quarter, imports of Polish dairy products to Ukraine 5 times exceeded the corresponding figure for exports of Ukrainian dairy products to Poland. For 5 months since the beginning of the year the ratio has increased up to 7.4 times,” he said.

Tulush reminded that in April 2023 Ukrainian dairy products were not delivered to Poland at all. In May the products were delivered in 2 times less than in March of this year. At the same time, Polish products come to Ukraine steadily and supplies exceed EUR9.5 million per month in money terms.

“If we talk about the balance in terms of individual types of dairy products, the positive balance for Ukraine is observed only for milk powder and butter. For all other items the volume of Polish imports significantly exceeds the volume of Ukrainian exports, “- said the Ukrainian expert.

Speaking about the significance of the Polish import for the Ukrainian dairy sector, Tulush pointed out that while the share of Polish imports of dairy products to Ukraine exceeds 45%, the export of dairy products from Ukraine to the Polish market is only 8%.

Comparing the structure of export-import, he stressed that Ukraine supplies to Poland mostly dried milk, butter and whey powder. At the same time, the share of milk powder is 75%. Speaking about the structure of import of Polish dairy products to Ukraine, here, according to him, prevail cheeses of various kinds with the share of 75% and 10% account for dairy products and whey.

“This shows that the volume of mutual trade between the countries is not comparable. Ukrainian dairy products are not a threat to the Polish dairy market,” stated the Ukrainian expert.

Alexander Samokhvalov, director of Lustdorf, one of the largest dairy producers in Ukraine, pointed to the reduction in the domestic dairy market in Ukraine due to the departure of main consumers – women and children from the country and noted the importance of exports to save the work of dairy companies. According to him, there is a constructive cooperation between the producers of dairy products in Ukraine and Poland.

In particular, Lustdorf was only able to make it through 2022 by increasing exports of milk powder to the EU. Due to the loss of opportunities to export products by sea, the company is forced to transport products through the EU, particularly Poland. Recently, however, it has been idle at the border for two to three weeks or more, Samokhvalov said.

Director of the Polish Dairy Chamber (Polska Izba Mleka) Agnieszka Maliszewska stressed that both sides are recording the same problems on both sides of the border, in particular with logistics. She urged the veterinary and customs services to solve them as soon as possible.

“The best solution to problems is mutual dialogue, not protests. Especially protests by those groups that do not represent the interests of our sector, but adjust to them. It is important for us that those groups that create problems for us do not tell the Polish or Ukrainian government how to act,” she stressed.

At the end of the first Ukrainian-Polish Dairy Dialogue, both associations will send the governments of Poland and Ukraine a joint statement with proposals for resolving the situation.