Companies’ owners and food producers ask the Parliament of Ukraine to support the bill №6155 "On the basic principles of food products trade". The document would allow to quickly implement European rules for doing business in the Ukrainian retail market.
Food producers and economists claim excessive delays in payments for delivered products. For example, under the contract, it can reach 120 days (with an average sales period of 14 days). In fact, payment can come to the manufacturer on the 160th day, and suppliers from time to time explain it by lack of money. However, under such a scheme, it is the producers who suffer the most - they are simply left without working capital. In addition, they become uncompetitive compared with foreign suppliers who have cheap financial resources. Conscientious market participants have already found themselves in unequal conditions, and even signs of a financial pyramid seem to appear in government offices in such a scheme. In addition, the market is monopolized, as each new supermarket “closes” smaller stores within a radius of 1 km. According to manufacturers, such working conditions eliminate the possibility of development for business, do not promote payment discipline and do not protect the competitive environment.
“We must support Ukrainian producers, who today literally occupy a weak position on supermarket shelves. This will strengthen our national food security, make our producers competitive and support their market position, - says MP Dmytro Solomchuk. - And most importantly - it will jumpstart economic development. There are also responsible networks, but our task is to create a legislative balance between all the businesses. We cannot allow a situation in which, due to the shortcomings of the legislation, Ukrainian producers lose competition to foreign products in large retail chains. ”
The Ukrainian producer should create jobs and ultimately ensure the growth of the GDP. "In Europe, deferred payments for products depend on the timing of their implementation, and it’s normal practice. Rhetorical questions arise - is it fair for producers to receive money for a product in six months, while during this time, for example, a third of its raw materials may become more expensive? How fair is the price of products in large chains, which sometimes can be twice as high as in the stores of the manufacturer's network?” - adds Dmytro Solomchuk.
According to the people's deputy, under such conditions, all manufacturers - network suppliers in the country fail to receive about 5 billion dollars, which remain in the working capital of the retail. And the retailer still pays a subscription for all imported products. Because of this, it is cheaper for a Ukrainian manufacturer to build production abroad, provide Ukrainians with jobs there, pay taxes there, and sell products in networks in Ukraine.
This situation could be changed by the implementation of the bill №6155 "On the basic principles of food products trade", which is awaiting consideration by the parliament. It was discussed at the meeting by representatives of producer companies and associations of market participants, in particular, the All-Ukrainian Agrarian Council, the Association of Pig Farmers of Ukraine, the Association of Milk Producers, Ukrkondprom, the All-Ukrainian Association of Bakers and the Business100 community.
The document outlines the requirements for sales contracts, sets deadlines for deferral of payments for goods received. In particular, sets the amount of penalties for each day of non-payment.
Besides, the draft law prohibits prescribing conditions that may change the range of products of the business entity, apply offsets when paying for the delivered products, return them to the supplier, except for certain cases, and so on.
"We hope that the people's deputies will finally listen to the Ukrainian food producers," said Mykhailo Sokolov, deputy chairman of the All-Ukrainian Agrarian Council. - The document, which is currently awaiting consideration in the parliament, can really become the basis for the formation of fair market relations in the field of food sales, when none party will be able to abuse its dominant market power. We have been waiting for this for years, and we could have invested our honestly earned money in the development of production for a long time, instead of lending for the purchase of imported goods through retail chains. "
Oleg Hetman, economist, expert of the Economy Expert Platform, notes that in regular market relations, the state regulation is not appropriate. However, when a certain market has distortions, in certain regions or throughout the country there are manifestations of the prevailing market power of individual market players - government intervention is required. "As a result, market distortions are detrimental to all citizens of Ukraine. The EU has long had a separate Directive of the European Parliament and of the Council on unfair trade practices between agricultural and food businesses. It prohibits actions that can be interpreted as unfair in the relationship between buyers and suppliers, "- adds the economist.
The draft Law of Ukraine "On Basic Principles of Food Products Trade" №6155 was submitted to the Verkhovna Rada on October 8, 2021, currently being considered by the Committee on Economic Development https://bit.ly/3nsamtb
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