Ukraine has announced a third victory in the “cheese war” with Russia. It is Petro Poroshenko, Minister for Economic Development and Trade, who managed again to persuade the Russians that Ukrainian cheese is good. Let us hope that “persuasions” and agreements will not vanish in thin air this time and the Russian border will be soon opened for Ukrainian cheese makers.
Following the talks between Poroshenko and Gennady Onishchenko, head of the Russian consumer rights watchdog (Rospotrebnadzor), three out of seven Ukrainian enterprises are soon to resume the supply of cheese to Russia, the Ukrainian minister said. These are the private company Prometei (Chernihiv oblast), the joint-stock company Pyriatyn Cheese Factory (Poltava oblast), and the Hadiachsyr Ltd. (Poltava oblast), which have already been inspected by Rospotrebnadzor. “The governments of the two states have decided today to set requirements to the manufacturer, and we said that, if these requirements were met, the restriction on the supply of these products to the Russian Federation would be lifted,” Poroshenko said at a briefing in Moscow. It is now up to the manufacturer to exercise quality control. As Poroshenko emphasized, the two sides agreed that every batch of the cheese to be dispatched to the Russian market would be examined separately.
Meanwhile, social networking sites are already trying to guess the principles by which the first three “lucky cheese makers” were selected. “It is unclear how the three cheese factories were picked and, thanks to Poroshenko’s negotiations, allowed back onto the Russian market,” Oleksandr Danyliuk writes in his blog. “Hadiachsyr belongs to the oligarch Oleksandr Yaroslavsky, the Pyriatyn Cheese Factory to Fedir Shpyh (former owner of the Aval bank), and Prometei to Anatolii Yurkevych (No. 24 on Forbs’ Ukrainian list). Yaroslavsky (with his brother Oleksii) and Shpyh were elected to parliament in 2002 on the Our Ukraine ticket, while Yurkevych was appointed Deputy Chairman of the Kyiv Oblast Administration in 2005.”
Poroshenko’s aide Iryna Friz assured The Day there was no need at all to seek any political subtext in the choice of the three factories. The borders were opened to the cheese makers that were the first to undergo a Rospotrebnadzor inspection. Yet she does not deny that Ukraine wanted these three businesses to regain access to the Russian market, for they accounted for 60 percent of all cheese supplies to Russia.
Mykola Prysiazhniuk, Minister for Agrarian Industries and Food, has also confirmed to journalists the top-priority status of these factories. In his words, if Russia opens the door to these three players, this “will be a positive signal” to other cheese makers, too. So it can be said that Pyriatyn, Hadiach, and Prometei have in fact blazed the trail to the Russian market for the rest of the “cheese outcasts.”
It will be recalled that Rospotrebnadzor promised to resume inspecting in the near future the Ukrainian cheese producers that were banned from exporting their production to Russia. For example, the Russian watchdog said it was sending another inspection team to a fourth cheese factory, Dubno Moloko, as soon as the next week.
In an interview with The Day, Serhii VOVCHENKO, manager of the Milk Alliance holding (which incorporates the Pyriatyn cheese factory), comments on the reaction of the producers, who were promised that the border would be opened in the near future, to the news that the “cheese war” is over.
First of all, we congratulate you on a victory in the cheese war and a renewed access to the Russian market. Incidentally, do you really consider the results of the latest talks between Onishchenko and Poroshenko in Moscow a victory?
“We think so.”
Are you disturbed by the demand that all the batches of Ukrainian cheese that will be crossing the Russian border must undergo another inspection?
“Not yet. The history of relations with the Russian side has taught us that no conclusions can be drawn before there is a document signed by some top officials. The inspection schedule for every batch is not yet known. We do not even have information about the way our cheese will be cleared through Russian customs.
“Earlier, too, every batch of cheese to be dispatched to Russia was examined at the Veterinary Medicine Institute’s laboratory for antibiotics and vegetable fat. So I don’t think the Russian border check will place any additional burden on us. Yet they may demand some in-depth analyses from us.”
Are you not afraid that this mandatory inspection may result in the same situation that occurred with palm oil at Hadiachsyr, when Russian inspectors failed to detect palm oil but still widely claimed that Ukrainian cheese makers were not maintaining technical and sanitary standards? Are you prepared to face the risk that the very first inspection on the Russian border will tarnish the reputation of Ukrainian cheese again?
“Russian inspectors have visited our factory and highly appreciated our production process. Only two of all the found shortcomings applied to the Pyriatyn cheese factory. We remedied the deficiencies in a short time. No sooner had the commission left the factory than the defects were corrected.”
And what kind of shortcomings were these?
“The first was that some components were delivered to the cheese-making shop in transportation packages. In other words, flavor bags were brought to the shop floor from the warehouse instead of being emptied into s special container. We have already installed a special stainless steel container, and now the flavor is automatically poured into it at the warehouse and only then is delivered to the shop.
“The other remark was that the belt, which transfers cheeses from the molder to the press, had no shed over it. The Russian inspectors demanded that the transfer belt be equipped with a shed. We did it very easily, too.”
What about the other criticisms?
“They concerned some common Ukrainian problems, including production specifications for the Rosiisky cheese brand. Onishchenko said that we can make any cheese we like to Ukrainian standards and sell it on the Russian market, but Rosiisky should be made to Russian standards only, i.e., it must take at least two months to mature.
“It is only Parmesan cheese that can mature so long (6 to 9 months) in Ukraine today, while the common cheese varieties take less than a month to mature because our cheese makers are applying up-to-date technologies and using new imported starters. We dropped the so-called industrial ferments long ago because it implies a very lengthy process that results in unstable quality.
“But if the Russian side refuses to recognize our Rosiisky cheese made under this technology, we will be selling other cheese brands, for we have a wide range of them. Yet there will be losses, of course – Rosiisky accounts for 50 percent of the Ukrainian cheese brands that go to the Russian market.”
In other words, you are not going to reapply the old technology to please the Russians?
“If we cause this cheese to mature for two months on the basis of present-day ferments, it will just overripe and burst. And we will not use the old starter again. Our specialists concluded long ago that old starters lead to unstable quality and bacterial content.”
Are the Russians still making Rosiisky according to the old technology?
“Our Russian partners, who sell our cheeses, have a factory of their own. They have long been making Rosiisky on European starters.”
WITHOUT AN ALTERNATIVE?
The Pyriatyn factory came to a halt on February 9 because of this Russian-Ukrainian cheese story. So you have not been making cheese for all this time – more than two months?
“Not quite. We shut down on February 9 and did not produce any cheese until March 1 because the warehouse was full to the brim. Then we sold the produce on the domestic market and began to work at 45 percent capacity. We are still doing so. We hoped and believed that the Russians would open the border, so we were getting ready for this. I am only afraid of this: now that Russia has given us the green light, we may say: wait a little, we’ll make some more cheese.”
Have you assessed the losses the Pyriatyn factory has suffered in the cheese war?
“We were short of about one million dollars a week. Therefore, we failed to supply for three weeks in February, four in March, and two in April. Nine weeks means a loss of 8 to 9 million dollars. It is a very large amount for us.
“We have always been supplying two-thirds of the Pyriatyn products to the Russian market and selling one-third in Ukraine.”
Why are we so much fixated on the Russian market? Taking into account the Russian partner’s fickleness, would be better to reorient to other markets or at least diversify sales?
“We also sell our cheese to Kazakhstan (the second largest importer of our products), Armenia, Azerbaijan, and Moldova (the third largest importer)… We recently contracted a small batch of cheese to be sold to Israel. But this is negligible in comparison with the Russian market. Pyriatyn alone could dispatch 1,000 tons a month to Russia. Asia will never eat so much. Take China, for example: with a population of 1.5 billion people, it consumes a mere 20,000 tons of cheese a year. They have no culture of consuming this foodstuff. The European market is glutted with its own cheese. The Europeans themselves are trying to supply onto the Russian market. Incidentally, Germany is Russia’s second largest supplier of cheese, with Belarus and Ukraine coming first and third, respectively.”
SUING IS NOT WORTH THE EFFORT
Are Ukrainian cheese makers not losing the domestic consumer in an attempt to capture the Russian market? Did the Ukrainians begin, after all this palm oil story, to doubt the quality of and buy less national cheese?
“They are losing him. Both Russian and Ukrainian consumers are very sensitive to the information that comes from the mouth of officials. No matter how people may criticize the government, they trust its words all the same – they said the cheese is bad, so it is bad indeed.
“There have even been incidents in Russian retail outlets: customers would give the store manager hell for selling Ukrainian-made cheese.
“In Ukraine, too, people watch television and listen to officials… And, after this kind of ‘promotion,’ it is so hard for us, producers, to persuade people that we do not put even a drop of palm oil into the cheese they eat.”
In what way are you going to make up for your sullied reputation? Take legal action?
“No, we won’t go to court. One must put information across to the consumer through other sources. We have planned some promotional and propagandistic actions.
“We should make it clear to the consumer that it makes sense for the producer to substitute at least 75 percent of animal fat in cheese. Not less than that – otherwise this will adversely affect the economics of the process and it will be more profitable to make natural cheese. To adulterate cheese and add 5 percent of vegetable fats only means to make the product more expensive.”
But, still, why do you not want to sue if the truth is on your side?
“To sue whom? We have pondered this and consulted with lawyers… We were told suing would not be worth the effort. This would amount to warring against another state… Shall we benefit from this?
“So we decided it would be better to spend the money, intended for the payment of legal costs, on explaining things to the consumer.”
