A free trade agreement with Turkey could make certain types of Ukrainian agricultural products uncompetitive in Ukraine and in foreign markets, since Turkish food products have already taken a strong position in the world and similar Ukrainian products may not find markets there.
The head of the Ukrainian Agricultural Export Association (UAEA), Dmytro Kroshka, told Interfax-Ukraine on Monday the impact of the free trade agreement with Turkey signed on February 3 on the export of products Ukrainian farmers.
“Competition between Ukraine and Turkey is more visible in third country markets. We have already determined that the Turkish tomato on the Ukrainian market will be cheaper than the domestic tomato. Our producer understands that if he cannot make money in the Ukrainian market, he will look for sales in Europe or elsewhere, where it turns out that Turkey is exactly the same in these markets. And sooner or later, an industrialist who cannot reorient himself will have to reduce his production or abandon it, it is very likely, ”said the head of the association.
He said the main risk for Ukraine’s agribusiness from zeroing tariffs is the export orientation of Turkish producers, supported and controlled by the state.
“In Turkey, there is huge infrastructural and financial support for exporters. The state establishes KPIs there, and a manufacturer is supported, whose products are not only produced, but exported. And for a manufacturer to export, its products must meet the quality requirements that the market demands, not just increase in volume. The effect of Turkish policy has become actively noticeable for us in recent years, when the active expansion of Ukrainian products into world markets began,” Kroshka said.
The head of the United Arab Emirates said that Ukrainian producers of apples, nuts and other products from the group of fruits and nuts will certainly benefit from the actions of the FTA, which Turkey will be able to re-export to countries in the Middle East and from Africa. , taking advantage of its favorable geographical location. However, this is guaranteed to have a negative impact on vegetable and egg producers.
“We just need to look at the news about the FTA between Ukraine and Turkey as news that we will sell more there and the trade turnover will definitely increase. But at the same time, I think this agreement will reveal a wave of Ukrainian internal economic problems in the field of agriculture, which are related to the production of common agricultural goods with the main Turkish products,” the expert said.
He also said that in 2022, Ukrainian agricultural producers face an increase in energy costs, a revision of existing taxes and the introduction of new taxes, the taxation of companies, which, associated to an increase in Turkish food imports, will lead to a wave of bankruptcies of small agricultural enterprises if they do not receive adequate support from the State.
He said that the agreement on the main terms of trade in food products between Ukraine and Turkey took place simultaneously with the approval of the export strategy of Ukraine and the sectoral strategy of Ukraine. export of food products, the implementation plans of which had been provided, including the reduction of the tax burden on producers. However, this decision was never implemented, which will affect the state of the market in the near future.
“It seems to me that many manufacturers simply will not survive this stage of Ukraine’s development. 2022, given these factors, will be the start of a wave of bankruptcies, especially for small businesses,” said the head of the UAEA.
AGRICULTURAL PRODUCTS, FOREIGN MARKETS, FTA, TURKEY, NON-COMPETITIVE