You're reading: Prices of milk in Ukraine may drop by 30%

Prices for milk on the Ukrainian market may drop by 30% if Russia introduces an embargo on Ukrainian cheese, according to President of the Ukrainian Agribusiness Club (UAC) Alex Lissitsa.

"Private farms rather than agribusinesses will cut prices, which in turn may increase the slaughter of horned cattle," he said at a press conference in Kyiv on Friday.

However, he says he considers the possibility of the introduction by Russia of such sanctions against Ukrainian dairy foods as slight.

"Judging from all that’s happening, I don’t believe they will apply any sanction against Ukraine. Now I’d call it nothing more than noise or nonsense," he said.

According to Lissitsa, larger groups of Russian inspectors would have been sent to the Ukrainian factories whose products did not allegedly meet Russian standards if Russia intended to introduce sanctions against dairy foods from Ukraine.

"It is a fact that we’re a net cheese exporting country, and of course if Russia closes the market to cheese supplied by Ukrainian enterprises, it will painfully hit our industry. Apparently, it would be the most painful hit among all the sectors of agriculture," he added.

According to the UAC, Ukraine produced 139,000 tonnes of hard cheese in 11 months of 2011, which was 20% up on the same period of 2010.

Fifty six thousand tonnes of those foods, or over 60% of overall production in Ukraine, were exported to Russia.

In the first 11 months of 2011 Ukraine exported hard cheese and cheese products to Russia to the tune of $320 million, and the UAC forecasts that the amount may have reached $350 million over the whole of 2011.

At the same time, Ukraine imports premium hard cheese worth $22 million.

Gennady Onishchenko, the chief of the Russian Federal Consumer Protection Service (Rospotrebnadzor) and the chief state sanitary doctor of Russia, told Interfax that his agency, having analyzed the situation on the consumer market in the dairy product segment, and concluded that "in the fourth quarter of 2011 there was a noticeable deterioration in the quality standards of the cheese supplied from Ukraine."

In particular, there was an increased level of palm oil in the cheese supplied to Russia by a number of Ukrainian manufacturers.

By Russian standards, in particular, those pertaining to milk and dairy products, such products containing high levels of palm oil should be called a "cheese product" and not "cheese."

"The products from the Pyriatin cheese factory in Sumy region, the Velyky Burluk cheese factory in Kharkiv region and the Zvenyhorod cheese factory in Cherkasy region are of particular concern," Onishchenko said.

He said that over 20 Ukrainian cheese factories supply products to the Russian market.

In keeping with a ban introduced by Russia in the middle of 2012 following joint Russian and Ukrainian vet inspections, a mere 10 Ukrainian dairy producers have been authorized to supply their products to Russia.

Milk Alliance, one of the largest dairy holdings in Ukraine, recently said it was perplexed at the statement made by Rospotrebnadzor’s chief that the quality of cheese supplied by some Ukrainian companies to Russia, including the holding’s Pyriatin cheese factory, had worsened.