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Experts forecast domestic companies products selling difficulties in case foods entry duties are lowered

Agrarian market experts believe in case of agricultural products/foods entry duties (external trade goods groups nomenclature 124)
5100% lowering many domestic agrarian producers will confront products selling problem due to domestic market getting saturated with better and cheaper imported products.
This draft Law has both negative and positive impacts: its negative impact spreads over most domestic foodstuffs producers, while its positive impact covers domestic consumers/raw materials market operators, said Vasyl Vintoniak, Agrarika Ltd Director.
In case foods entry duties substantial lowering, Ukrainian producers of a great number of foodstuffs will confront a serious domestic market competition toughening due to analogous foodstuffs (often of higher quality) starting being supplied; simultaneously, selling of low-quality/expensive domestic foodstuffs will start scaling down, quite possibly resulting in these foodstuffs output decline, told Vintoniak.
Simultaneously analysts admit, in case foods entry duties are lowered many domestic producers (in part. meat processors) will be able to solve their production facilities resources supply problem.
Beef/pork entry duties lowering is, basically, a positive factor, due to domestic processing industry presently lacks resources, said Anton Porembskiy, Derzhzovnishinform Main Information Analytical Centre Expert.
Analysts admit after foods entry duties lowering domestic market competition will strengthen resulting in Ukrainian foodstuffs quality enhancing.
Today world butter market situation makes butter supply to Ukraine unprofitable even at 15% entry duty rate; yet, some qualitative dairy products (e.g. yoghurts, cheeses) can be started supplied to Ukraine due to European export subsidies. Sure, that wont be cheered by Ukrainian producers which are presently very well protected against any dairy products import and therefore dont apply any special efforts to reach their products quality enhancing/ prices lowering, said Vintoniak.
He added entry duties lowering will oblige domestic producers to improve their products quality as well as not to boost their products sale prices. At same time, Vintoniak fears import liberalization can negatively affect as well diligent producers who make qualitative products, if European subsidized products with unreasonably low prices will start being imported to Ukraine.
Experts do not exclude that after foods import regime liberalization redivision of domestic foods market between its main participants may start.
Chicken meat entry duties curtailing can result in domestic branch leaders profits falling and make to leave market producers with high production cost price, not permitting to have sufficient margin for these producers survival under conditions of cheap imported products inflow, declared Porembskiy.
Experts believe entry duties shortening will as well make it possible to control contraband/foodstuffs illicit import.
Though packed food products (ketchups, sausages/other meat products, fruit-and-vegetable canned food) entry duties lowering may cause import growth, yet, at same time, it will inevitably result in import legalization. You should mind, all foodstuffs presently sold in retail shops, canned olives, peas, maize, in fact are nothing else but contraband goods, said Porembskiy.
There should be healthy market competition; there is nothing to fear if some small volumes of expensive European foodstuffs are brought into Ukraine for assortment diversity. Mind, until now similar products have been in any case brought in, yet illicitly. A vivid example is presence in most supermarkets of rather cheap Polish cheeses, import of those, as to official statistics, is quite small, added Vintoniak.
Experts believe entry duties lowering wont influence negatively domestic agricultural producers.
I dont think it may negatively affect domestic cattle number/beef output, since, as it is known, within few last years when high entry duties were in vigour, there was absolutely no cattle number/beef output growth, just to the contrary, even until now all indexes continue falling down, specified Porembskiy.
Most experts believe foods entry duties lowering will lead to domestic market supply growth, what, in its turn, will cause main foods prices stabilization.
Recent domestic meat market products shortage has lead to significant wholesale/retail sale prices growth; therefore, meat import is necessary for both end consumers as well as sausage products producers. As for other foodstuffs, it is to be said, their prices growth is now uncontrolled and, in most cases, quite groundless. Probably, imported foodstuffs inflow will be able to restore substantiated pricing policy, shared her opinion Olena Starostenko, analyst.
As earlier reported, Cabinet had proposed VR to low down agricultural products/foods customs entry duties (external trade goods groups nomenclature 124) as well as to unify Customs entry duty rates.
Cabinet considers that current 50150% (and over) foods entry duties in fact prohibit foods legal import and stimulate contraband; Cabinet is going to prevent contraband through entry duties lowering/unification.
A note attached to draft Law specifies, that arithmetical average entry duty (which is presently 19.69%) for goods referring to nomenclature groups 124, after bringing of changes will be lowered to 10.54% (with live animals/animal products entry duty to be lowered from 20.88% to 9.04%, plant products from 16.49% to 8.16%, fats and oils from 16,67% to 9,54%, foodstuffs from 24.73% to 15.42%).
Cabinet proposes import customs duty lowering for beef, from 25217% down to 15% beef cost (full/preferential), for pork, from 20200% down to 1216%, for cattle, pigs, sheep by-products, from 12143% down to 1015%, for meat/poultry by-products, from 80234% down to 15%, for live fish, from 2143% down to 20%.
As to State Statistic Committee, 2004goods export was US$32.672.318.230(up 41.64% against 2003), while 2004goods import equaled to US$28.996.030.720(up 25.96% against 2003). Foods export was US$3.472.768.050, foods import US$1.908.314.440.

29.03.2005



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