On a diet: who, when and why banned Ukrainian confectionary production


Only the countries of the Customs Union are not satisfied with the Ukrainian sweets. What are the reasons and how is this problem being solved?  

Last week following Russia, which refused from the Ukrainian sweets 2 years ago, the European Union laid partial embargo on the Ukrainian confectionary products supply. Primarily it concerns nut candies, which are not exported because of the absence of Certificate of Authentication.

According to Oleksandr Baldyniuk, president of industry association Ukrkondprom, such blocking is artificial and it happened only because in September 2014 the EU implemented  regulation №884/2014. Due to the contamination risk by aflatoxins it imposed special conditions governing the import of certain feed and food containing more than 20% of peanut and some other nuts from certain third countries. First of all, it affected confectionary products. According to the regulation, exporting country must provide its enterprises, which deliver on the EU territory corresponding products, with Health certificate with the set out model.

Read as well: Who will benefit from sweets restriction by Boris Kolesnikov?

 “I see no difficulty about the implementation of this regulation. There are a lot of regulated laboratories, which effectively check safety indicators, following which are confirmed by this certificate”, says Baldyniuk. But in our country there is no procedure, according to which such certificate can be issued. And such situation happened, perhaps, as a result of inconsequent process of reforming of regulatory and certification bodies. Let’s recall that in Ukraine in the framework of the regulatory bodies reform and deregulation for almost a year a new body has being created - the State Food Safety and Consumer Protection Service, which must accept responsibilities of the State Veterinary and Phytosanitary Service, State Sanitary and Epidemiological Service, state inspections for the protection of consumers rights, and some other inspections being liquidated. And this new regulatory body is going to have the authority as to the Health certificate.

By the way, according to Baldyniuk, the potential of export of the confectionary production, which contains 20% and more peanut or pistachio nuts or hazelnut from Ukraine to the EU makes about 10 thous. tons per year, which would provide additional usage of sugar in a volume of 5 thous. tons, flour – 4 thous. tons, fat-and-oil products – 3 thous. tons, starch – 1,5 thous. tons. Currently, this problem is being solved by the government, and according to the data of the publication, may be solved to the end of the week.

Agravery.com recalled who, except the EU, blocked the Ukrainian sweets supply and how was resolved the situation.

Russia

In July 2013, Gennadii Onischenko, the former head of the Russian consumer protection agency Rospotrebnadzor, Russia's Chief  State Medical Officer made a statement about the Roshen Corporation confectionary production import ban due to non-compliance to the quality and safety requirements. In the Roshen milk chocolate seemed to be found benzapyrene*.

The corporation sent an official request to the Russian consumer protection agency Rospotrebnadzor to give the enterprise the acts that are evidence to such violations, and also pass the legal standards of Russian Federation. But no acts had yet been received. Such restricting measures of Rospotrebnadzor inflicted considerable losses to the Ukrainian economy. Monthly, export of the Roshen confectionary production to Russia ran at about UAH 135 million. Monthly losses of Ukraine were minimum USD 17 million only due to insufficient receipt of currency returns.

Read as well: Russian court has taken the part of Roshen in the controversy with tax officials

Moreover, Russia refused from all the sweets, without any exception. At present, there are no Ukrainian sweets, except those that are produced by the producing departments of Ukrainian companies in Russia. It is also should be mentioned that Russia for 10 years has been applying restrictive measures to Ukraine as to caramel. In the past 10 years this product supply has decreased from 140 thous. tons to 5 thous. tons per year.

Following Russian inquiries, Ukrainian sweets were checked by Moldova, Kazakhstan, Tajikistan, Georgia. But no violations were found.

Belarus.

The Belarusians had to change their taste in spring 2013. That time Belarus was the 4th in size export market for Ukrainian confectioners (more than 5% of all the export according to the government statistics as of 2012), but suddenly stopped importing Ukrainian sweets right at the customs house. Due to the supply restrictions the monthly losses of Ukrainian confectioners were ₴ 40 million.

According to the market participants, the difficulties with production supply had the largest confectionary producers of Ukraine, including Roshen, Konti, AVK and ZHL (Zhytomyrski Lasoschi). In their informal conversations the managers of the companies connected the actions of Belorussian authorities with the nationalization of the factories in the country.  Up to 50% of all import of confectionaries in Belarus is accounted for Ukrainian production. Even secret orders were set to the Belorussian shops to limit places on the shelves for import production. It was known from counter agents in Belarus. Thus, Belarus authority planned to protect domestic confectioners. Due to such actions of Belarus, export of confectionary products from Ukraine was stopped. It happened on Easter Eve when peak sales were expected. 

After the first problem was solved, there appeared a new one in the interrelation with Belarus. In August, the customs house of Belarus took measures to importing of the confectionaries made by the Ukrainian Roshen Factory on the territory of Russia through the border crossing checkpoints at the Belarus section of custom’s green-light passage of Customs Union and re-export from the Belarus Republic territory.

In 2014 Ukrainians decided to establish facts of discriminatory and unfriendly actions of Belarus Republic as to confectionaries. And in return introduced customs duties in size of 55,29% of customs commodity cost as to importing to Ukraine of a number of Belorussian products. After the problem with the Ukrainian production supply to Belarus had been settled, the written above action was cancelled.

The situation emerged again in 2015. In April Council of Ministers of the Republic of Belarus adopted Resolution “On licensing the import of certain types of pasta, confections and raw materials for their production outside the single customs area of the Customs Union and amendments and alterations to the Resolution of the Council of Ministers of Belarus № 156 as of February, 17, 2012”. Under the Resolution, the import of certain products to Belarus outside the Customs Union is carried out on the basis of one-time licenses issued by the Belarusian State Food Industry Concern Belgospishcheprom, but only if the concern and the confectioner have agreements on confection supplies to Belarus setting minimum prices. In the course of negotiations with Belgospishcheprom the Ukrainian enterprise demanded to increase selling prices for products from 30% to 500%, which made the sales impossible.

Since July 27, Belarus has again banned import of Ukrainian sweets by adopting a Resolution “On amendments and alterations to a resolution of the Council of Ministers as of February 17, 2012 № 156”, by which sanitary-hygienic expertise of foreign-made products has been implemented.

Kazakhstan.

In 2005-2007 Kazakhstan conducted a special protective investigation related to import of the chocolate confectionary products. Despite the significant violations of the provisions of the Free Trade Area Agreement in the CIS and the procedures, specified by the Agreement on Safeguard of WTO, which were committed during the investigation, 14.09.2011 the Government of the Republic of Kazakhstan adopted a regulation № 1055 “On the introduction of protective measures related to import of certain forms of confectionary products”, introducing safeguard duties on chocolate products for a three-year term. Ukraine was also the subject of these restrictions.

The Ministry of Economic Development and Trade of Ukraine initiated then an investigation in order to establish any discriminatory and unfriendly actions by Kazakhstan against Ukrainian companies of the confectionary sector. Based on the findings of this investigation, the Interdepartmental Commission on International Trade of Ukraine established in 2012 the fact of such actions of Kazakhstan. Despite this fact, the unfriendly actions of Kazakhstan have not been met with any appropriate response from Ukrainian part.

Kazakh trade restrictions caused significant damage to Ukrainian confectioners. The decline in exports from Ukraine to Kazakhstan amounted to 18.4 thousand tons. The amount of investments that was not contributed to fixed assets by the companies of the confectionary sector totaled in 2011-2012 around  UAH 100 million, the loss of the payroll of the employees of the confectionary companies was in 2012  UAH 14.4 million, the loss of revenue of the state due to the shortfall of tax amounted  UAH 15.3 million.

Maria Brovinska

Translated by Poliglotus Language Company  



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