Blackouts impact Ukraine’s dairy industry

The whole dairy farm needs power generation because all processes – from milking to storing milk – require electricity. Photo: Canva

Continuous blackouts have had a detrimental impact on the Ukrainian food market, and dairy production is among the most affected segments, according to market players.

If the power outages continue, they will drive up prices for meat, dairy, and bakery products, Denis Marchuk, deputy chairman of the All-Ukrainian Agrarian Council, told local press.

Russia has impacted 60% of the Ukrainian power-generating capacities, which is causing continuous blackouts across the country. DTEK, Ukraine’s largest private power company, which has lost 90% of its generation capacity, has warned of a potential worsening in winter, with outages lasting up to 20 hours per day.

Dairy farmers face severe losses

“Farmers began preparing for power outages in the autumn of 2022, but the situation is worse now because we are facing severe losses in the energy sector,” Marchuk said.

The issue is particularly pressing for the dairy industry, with reportedly every link of the production chain affected.

“The whole dairy farm needs power generation because all processes – from milking to storing milk – require electricity. A farm with 500 cows consumes up to 100 kW per hour, which requires significant amounts of diesel fuel. Accordingly, the [electricity] costs are growing, and today, the milk purchase has already increased by 3-5%. The same applies to the processing industry,” Marchuk stated.

The outages could trigger a growth in dairy prices, Marchuk said. The dairy sector has massively switched to diesel generation, but the electricity cost is substantially higher in this case compared to that from the common energy grid.

Dairy product returns

In July, the number of returns of dairy products jumped 20% to 30%, the Union of Dairy Enterprises of Ukraine recently estimated. It is reported that some Ukrainian retailers pass the losses associated with product spoilage onto the processors, adding pressure on the industry.

Heat

In the face of power outages, the problem of heat at Ukrainian farms is an issue. Ventilation problems, together with the power shortage due to missile strikes on energy facilities, has led to a reduction in milk production on dairy farms. Unstable operation of ventilation systems on farms due to power outages increased the number of heat stress in cows, which also reduced the productivity of animals, Georgy Kukhaleishvili, an analyst with the Ukrainian Association of Milk Producers, reported.

In this background, the farmgate milk prices have inched up, Kukhaleishvili indicated.