Trends of integration processes development in the dairy products subcomplex of Ukraine

Abstract

To ensure the needs of the population of high quality milk and dairy products, it is necessary to combine the interests of all subjects of management of the dairy products subcomplex - milk producers, milk processing enterprises and enterprises that are engaged in the marketing of milk and dairy products. To harmonize their activities, it is important to develop modern mutually beneficial forms of cooperation built on the basis of cooperation and integration processes in the agrarian sector. The need of the development of cooperative movement in the dairy products subcomplex is dictated by the limited capacity of producers to perform simultaneously a number of key processes, such as milk production, sales, material and technical support, etc. It became the crucial trend after January 1, 2017 when the Association Agreement between Ukraine and the European Union was signed. The special relevance of the creation of integration in the milk and milk products market in order to streamline the activities of business entities and provide high-quality raw materials for dairy processing enterprises came into force after that. After signing the agreement, Ukraine pledged to implement sanitary and hygiene regulations concerning milk-raw materials. According to the current DSTU, milk is currently divided into five varieties: extra class, higher grade, first, second and unsorted. In the EU, there is no such division. In view of this, from July 1, 2018, changes will come into force in Ukraine. According to these changes, only three varieties of milk will remain: the extra class, the higher and the first. This means that milk of the second grade or unsorted will not be able for the processing enterprises. In addition, EU countries are allowed to import only extra class milk. Therefore, Ukrainian producers, who plan to export their products to the EU countries, will also have to comply with European standards. According to 2016, the total production of extra class milk was 366 thousand tons. It is only 14.6% of the total industrial milk that has arrived for processing. But, of course, the Ukrainian dairy market is quite promising. There is a potential for growth in consumption and opportunities for access to European and international markets. However, it should be understood that the European style of production involves compliance with the basic requirements, mandatory identification of animals, treatment, research on the most dangerous diseases, periodic quality control of milk, its industrial testing, cooling and rapid primary processing. The system of cooperation will allow creating an effective network of constant monitoring of raw milk. Improvement of the quality of milk will be due to ensuring efficient collection, cooling and transportation; using of technological milking equipment; veterinary care; reproduction efficiency of livestock; provision of feed; provision of other services. On September 13, 2017, the Cabinet of Ministers of Ukraine adopted the Concept of the Development of Farmers and Agricultural Cooperatives for 2018-2020. The purpose of the Concept is to create the necessary organizational, legal and financial prerequisites for the development of farms and agricultural cooperatives. According to the data presented in the Concept, the potential of agricultural cooperation in Ukraine is unrealized. In EU countries, agricultural cooperatives provide 57 percent of dairy production. In countries such as Austria, Denmark, the Netherlands and Sweden agricultural cooperatives produce more than 90 percent of milk. There are 590 cooperatives operating in Ukraine. Their members hold 1 per cent of livestock and produce only a relatively small proportion of dairy products. In this regard, the priority of the state agricultural policy should be the support of farms through the development of agricultural cooperation in order to increase their competitiveness. Implementation of the Concept is provided through the funds of the State Budget of Ukraine and local budgets and other sources stipulated by the legislation. In general at least UAH 1 billion will be required for implementation of the tasks specified in the Concept annually. Dairy processing enterprises of Ukraine are also gradually aware of the benefits of existence and development of dairy cooperatives. So, on the initiative of Danone Company a social project "Development of Dairy Cooperatives" is being implemented in Ukraine from 2010. The project enables agricultural producers to work on the basis of cooperation, mutual assistance, organization of effective sales of manufactured dairy products, supply of necessary means of production to ensure the efficient functioning and increase of the production of high quality milk. The development and support of dairy cooperatives and family farms is carried out through the following measures: equipping cooperatives with everything necessary for the efficient collection of milk, assessment of its quality and safety; the creation of artificial insemination of cows, provision equipment for stocking fodder, consulting and providing resources for improving public pasture; the transfer of heifers to certain members of the cooperative; provision of low interest loans to improve milk production technology and create more comfortable animal retention conditions; grants of equipment for dairy family farms; provision of feed in winter, milk deliver, premiums for milk quality; use of learning technologies of effective milk production and cooperation, etc. Thus, the formation of vertical and horizontal integrations is a necessary component of the development of civilized milk and dairy market, which will provide an opportunity to ensure the appropriate quality of milk and create the preconditions for expanding the export geography of dairy products subcomplex of Ukraine.