Bracing for a sharp decline in Ukrainian dairy
The Ukrainian dairy industry should be braced for sharp production decline in the coming years, says KSE Agro Center, a Kyiv-based consultancy.
Raw milk production in Ukraine is set to drop from 7.4 million tonnes in 2023 to 5.9 million tonnes in 2033, the analysts calculated. In addition, the average dairy cow population in the country is projected to drop by 31%. However, the average milk yield is expected to grow from 5.7 tonnes per cow in 2023 to 6.4 tonnes per cow in 2033, although this would only partly make up for the general capacity decline.
Analysts believe the dairy industry will be one of the worst performers among all livestock industry segments. For comparison, broiler meat and egg production are projected to grow by 28% and 31%, respectively.
Weak demand
Analysts anticipate that the demand for Ukrainian food will remain weak in the coming years due to negative demographic tendencies.
The Ukrainian government expects only 30% of refugees who left the country since the beginning of the war to return to the country when peace is restored, Alexey Chernyshev, the Ukrainian Minister of National Unity, recently said. The Ukrainian population has declined to 32 million, according to the Ministry. Nearly 10 million Ukrainians have left the country over the past 3 years.
Tough time
There are hopes for stabilisation in the country later this year, Andrey Tabalov, general director of Voloshkovo Pole, a prominent dairy manufacturer, told local press.
The key challenges are that retailers are delaying payments to dairy suppliers while the average business marginality of dairy processing is close to zero. Against this background, dairy processors found it hard to pay raw milk manufacturers in a timely manner, he said.
Furthermore, the industry continuously suffering from rolling blackouts as a part of the Ukrainian energy infrastructure was destroyed or damaged during shelling.
The market situation looks particularly tense in the cheese market, where, in addition to other challenges, Ukrainian dairy firms also face growing import pressure, Tabalov indicated.
“It is important for us to maintain production and support our teams to keep the industry running. The milk processing industry is an important economic component of the functioning of our economy during the war,” he stated.
