“Duty-free quotas for Ukrainian agricultural products in the European Union, which are defined in the current edition of the Association Agreement between Ukraine and the EU, are insufficient, and Ukraine intends to seek an increase in them,” said Andriy Dykun, Ukrainian Deputy Minister of Agrarian Policy and Food.
He noted that, after the end of April this year, the EU unilaterally nullified duties for a number of Ukrainian products subject to certain quotas, but domestic manufacturers have used only some of them. In particular, Ukraine has already launched poultry exports to the EU, but supplies of other types of meat have not been established.
However, according to Valery Pyatnitsky, Ukraine’s government commissioner for European Integration, the country’s authorities are currently negotiating a possible doubling of quotas for duty-free exports of agricultural products to the EU, which should benefit the meat industry.
Pyatnitsky said: “This is a unique year when, roughly speaking, in the eight months [from April when the EU nullified duties], we can use double the amount of the annual quota.” According to European Commission estimates, the duties nullified in April will bring Ukraine agricultural producers €400m per year. And Ukraine’s Ministry of Agrarian Policy and Food has estimated that if the number of nullified duties were doubled, then this figure would rise by another €180m.
Overestimation
At the same time, industry experts say this quota increase is overestimated, as Ukraine probably will not be able to use it fully.
According to Alexander Ohrimenko, president of the Ukrainian Analytical Center, the quotas, established in the Free Trade Zone contract, provide that Ukraine will be able to deliver 12,000t of beef to the EU during the year, or about 60% of its forecast beef exports in 2014.
“Apart from beef, [the contract provides that] Ukraine will be able to deliver about 20,000t of pork to the EU, but in 2014, in total, it is scheduled to export 5,000t of pork. At the moment, Ukraine has to import up to 180,000t of pork annually, as its production is insufficient to meet domestic consumption,” said Ohrimenko.
Also based on the current quotas, Ukraine can export 1,500t of mutton, but the country only imports mutton from Australia and does not export it. So the prospects of launching supplies of this type of meat are questionable, as it would require significant investment.
There are also some concerns about poultry exports, as Ukraine is actively increasing poultry production and will soon have a large surplus of poultry. However, the Free Trade Zone Agreement provides that it may not only export poultry, but also will be required to import it.
“According to the current agreement, Ukraine is allowed to supply the EU with 16,000t of poultry and, over the next five years, this quota will be increased to 20,000t. But at the same time Ukraine will be obliged to buy in 8,000t of poultry from the EU, and subsequently increase this purchase to up to 10,000t of poultry per year,” said Ohrimenko.
In general, however, poultry exports are the most promising sector of the trade, as Ukraine has the ability to supply the EU with up to 60,000t of poultry per year.