SGH study: Ukraine's EU accession would redraw competition on the Polish dairy market

A study by SGH Warsaw School of Economics on the consequences of Ukraine's potential accession to the European Union has reframed the central question for Poland's dairy sector: not whether Ukraine joins the bloc, but on what terms it is admitted to the single agri-food market. The report, described by the Polish agricultural outlet farmer.pl, assesses the effects of accession on food security in Central and Eastern Europe.

Experts split on who gains

The research used the Delphi method and involved 64 experts from Poland, Ukraine and other countries in the region. The most frequently indicated outcome was a win-win scenario, assuming benefits for both sides; 46 percent of respondents selected it. Polish participants, however, more often pointed to the alternative in which Ukraine gains at the expense of Central and Eastern European states.

According to the report, an increase in the supply of competitive agricultural products can weigh on prices and on producer incomes, particularly in regions that lack adequate stabilisation mechanisms. The study stresses that market mechanisms, and the way costs and benefits are distributed between individual countries and groups of producers, will carry substantial weight in determining the outcome of integration.

Purchase prices already under pressure

The debate lands on a market that is already weak. Parliamentary documents on the state of the sector pointed to a significant decline in milk purchase prices in recent months, farmer.pl reports. For an individual dairy farm, the outlet notes, accession reduces to three concrete questions: what production will cost, what the dairy will pay per litre, and how intense competition for outlets becomes.

In those conditions, the arrival of additional competitive production capacity on the single market could matter for the entire dairy chain. That does not translate automatically into lower prices paid to Polish farmers; the final effect will depend on the mechanics of integration rather than on the accession decision alone.

Processors push for phased integration

Marcin Hydzik, president of the Association of Polish Milk Processors, speaking at the Dairy Community Forum in Bialystok, argued that talks on Ukraine's integration with the EU should take into account the interests of producers and processors across the whole region. His position assumes a gradual inclusion of Ukraine in the single market, common standards as the end point, and equal rules of competition. He also highlighted the need for mechanisms allowing a response to sudden market disruptions, noting that Poland has been discussing for months how to shield producers and processors from the negative effects of changes on the milk market after any accession.

From the perspective of a Polish dairy farm, that comes down to a single test: whether a Ukrainian producer entering the single market would be subject to comparable requirements on production, quality and food safety. If competition is to be equal, the obligations should be equal too.

A larger market cuts both ways

The scale of Ukrainian agriculture is one reason the accession question draws close attention from the farm sector across Central and Eastern Europe. For Polish dairy, however, the report does not frame it as a threat alone. A larger common market also means potentially wider opportunities for sales, investment and cooperation. The Polish dairy industry is heavily tied to exports, so much will depend on whether Polish companies are able to capture a growing market on both sides of the future competitive divide.

The decisive variables identified for Polish milk producers are:

• the rules of access to the Common Agricultural Policy;
• the pace at which Ukrainian farms adapt to EU requirements;
• instruments protecting the sectors most exposed to a rapid increase in competition;
• the way costs and benefits are distributed between countries and producer groups.

The SGH report concludes that appropriately designed EU agricultural policy, local mechanisms for stabilising markets, cooperation along the supply chain and a gradual alignment of Ukrainian agriculture with EU standards can limit the risk of market destabilisation. For Polish milk producers, the level of competition, the position of domestic dairies and the pressure on purchase prices will hinge on those terms.