Farmers Ask for Subsidizing Raw Milk Production
Milk powder is one of the 9 essential food products that the Georgian Government has included in the special state program, which aims to maintain prices of these products unchanged. The state budget will finance the program by 10 million GEL.
Milk powder was included in the mentioned list, while Georgian farmers are suspending operation and closing enterprises, because they cannot sell raw milk and raw milk products. As noted by Tsezar Kakhadze, head of the Tsezar Georgia dairy products company, this is a strange situation and there is no clear answers to the existing questions.
Milk powder subsidization is a wrong decision, because the invested funds are outflows from the country and domestic farmers fail to sell their products, he said.
“The list of subsidized food products includes milk powder, the rival product to raw milk products. However, today the price of milk powder products has essentially surpassed the price of raw milk and raw milk products. And the Government subsidizes this direction, while it can promote raw milk production and assist domestic entrepreneurs in this way. Milk powder subsidization is the waste of money and similar decisions damage farmers.
In this situation, the Authorities should assist Georgian farmers and in this case the money will not be taken out of the country”, Tsezar Kakhadze noted.
Ana Mikadze-Chikvaidze, head of the Cheesemakers Association disagrees with the Government’s decision. The country possesses raw milk reserves, however, milk powder products have essentially surpassed these reserves, as the Government subsidizes them, she noted.
“I have no idea why milk powder was included in the list of 9 essential products. I was deeply surprised, when Georgian farmers started closing enterprises because of failed sales, while the country subsidizes the product that is not natural and in this way, we damage domestic entrepreneurs, while Georgian farmers need assistance and support now. Population also prefers to buy natural products than to pay double prices for their substitutes”, Ana Mikadze noted.
As explained by Kakha Koniashvili, executive director of the Association of Milk and Dairy Producers, the Government does not subsidize raw milk production. The Government could exempt the field from taxes and farmers would get essential relief for development. We have been asking for this relief for a long period, but in vain, he said.
The Government subsidizes the exchange rate differences for these 9 products. Milk powder is one of these products that were included in the list of priority essential products, he noted.
“This is a surprising fact, because the final products were not to rise in price. Consequently, the consumer was to enjoy preferences. When talking about the milk powder, we should realize that the consumer does not buy it directly at stores. It should be processed first and then supplied to the consumer in the form of various products. In this case the question is: why do we subsidize imports and why don’t’ we support the domestic production?!”, Koniashvili noted.
As noted by the executive director of the Association of Milk and Dairy Producers, in spring-summer period, the country recorded an excessive milk supply to the market and in this period, when the demand-supply system gets complicated, the domestic entrepreneur is able to replenish the market by products. The Government should maximally promote the domestic markets, not imports, even more so we have substitute milk powder in natural form, he said.
The Government should play an essential role in milk production subsidization to increase domestic production in the country, Koniashvili noted.
“We welcome subsidizing milk production in this or that form. This issue was relevant previously too, when the issue of exempting Georgian milk products from VAT was actualized. Milk subsidization would bring serious benefits to the country. The experience with vineyards has proved that the field will be revived and the market will regulate prices.
As for commodity stocks amid the state of emergency, I have been talking for many years that it is the Government’s responsibility to ensure food safety: grain, milk, beef should be produced domestically so as the country have its own products in force-majeure situation”, Koniashvili noted and expressed hopes that the Government will revise the strategic plan in this regard.
We remind you that milk powder is one of the 9 products that the Government has included in the special state program which calls for maintaining the price unchanged. This program will be subsidized by 10 million GEL from the state budget. Domestic manufacturers and milk producers ask the Government to subsidize the product.
Amid the coronavirus spread prevention measures, many restaurants, hotels and small bakeries were closed. As a result, the demand essentially declined and all small enterprises are facing the threat of closure. Thus, milk stocks that farmers cannot sell may become useless.