Dairy processors threaten to raise prices if subsidies are withdrawn

Entrepreneurs have been unable to reach the Ministry of Agriculture for a month, proving the inexpediency of changing approaches to subsidize the milk processing industry. If processors are left without subsidies, the price of dairy products is expected to rise accordingly, reports World of NAN, citing Atameken.

Vladimir Kozhevnikov, Head of the Dairy Union, explained the situation. Calculations of the entrepreneur on a practical example showed that for the production of 1 kg of butter you need 22 kg of raw milk. Taking into account the cost of milk, only raw milk production cost is about 4 thousand tenge and that's without taking into account other expenses of enterprises, and profitability.

"Processors need subsidies in summer to buy milk raw materials and production. Prices for raw materials due to external factors are constantly rising. For instance, for the last 2 years the cost of raw milk rose by 61% - from 126.9 tenge per kg to 204.2 tenge per kg, respectively, the prime cost of butter grew by 45.5%," says Vladimir Kozhevnikov.

Processors complain that, unfortunately, the Ministry of Agriculture, when choosing a way to support their sector, and having no evidence of fraud by milk processing companies, put at the forefront the recommendations of the anti-corruption service in the need to eliminate all corruption and financial risks of subsidies and completely forgot the main purpose of subsidies - stimulation of growth and saturation of the domestic market with domestic products, increasing the competitiveness of domestic enterprises and reduce dependence on imports.

According to NCE, due to state support, there is a positive dynamics of growth of dairy production in the Republic, over the past 5 years, the provision of the Republic in butter at the expense of domestic production has increased from 74% to 97%. This proves the effectiveness of state support measures.

But introduction of new approaches to subsidizing of processing by MoA will seriously worsen the situation of dairy industry, reduce their competitiveness, deprive them of possibility to buy raw milk in summer period and lead to rise in price of products.

"In Kazakhstan, about 70% of the dairy herd is contained in private subsidiary farms, which in the autumn and winter period virtually cease to give milk for processing. In this regard, milk processing enterprises, acknowledging the risks of a shortage of raw materials, are actively procuring finished products in summer and selling them at a later date. Because of seasonal decrease of consumer demand for dairy products, including butter in summer period", - said Asem Serikbekova, expert of Department of Agroindustrial Complex and Food Products of Atameken NCE of Kazakhstan.

In this regard, dairy plants are asked to keep the mechanism of subsidies unchanged and not to burden the population with additional costs.

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