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Ukrainian milk producers threaten to close their plants due to catastrophic gas prices

Source : 112 Ukraine

The Union of Dairy Enterprises of Ukraine is asking the government to set a grace period for the industry
19:27, 28 December 2021

Open source

Ukrainian dairy producers are threatening to close their plants due to catastrophic gas prices. The Union of Dairy Enterprises of Ukraine is asking the government to set a grace period for the industry, the association's site shows.

The report says that in January 2021 the price of gas was 4.9 UAH per cubic meter, while in January 2022 suppliers offer a cubic meter of fuel at 59-62 UAH.

"In the ownership structure of dairy production, the share of energy will be more than 25%. This will lead to a deep economic crisis in the dairy industry, which is already going through difficult times... Gas supplies at this price will make it impossible for milk processing enterprises to work and will lead to their shutdown," the appeal reads.

They also emphasize that the "catastrophic" rise in gas prices from January 2022 threatens to stop not only individual dairy companies, but the entire dairy industry.

"Dairy enterprises cannot block the giant gas tariffs by raising selling prices for their own products, as the purchasing power of the population is low. In addition, retailers are refusing to re-sign new agreements, which provide for a significant increase in prices for dairy products," the producers say.

The only way out in this case is to reduce production. It is reported that a number of dairies have already reduced purchases of raw milk from agricultural firms.

The association believes that effective state intervention, in particular, the establishment of a preferential tariff of UAH 32,000 [1,173 USD] per 1,000 cubic meters of gas, can prevent such a threat and avoid a food crisis.

As it was reported earlier, Ukrainian confectioneries halt the production of some of their foods because of the extremely high gas prices.

On December 22, the price of gas futures in Europe surpassed $2,000 per thousand cubic meters against the background of cold weather and reduction of gas pumping by Russian Gazprom.

Related: Ukraine to export dairy products to Jordan

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