Ukraine’s raw milk shortage driving prices sky-high

During the second half of 2023, the price of raw milk in Ukraine jumped by 36%, exceeding the level of some European countries, the Ukrainian Union of Dairy Enterprises estimated.

“I can’t recall such a sharp growth in raw milk prices in the previous years,” Leonid Tulush, head of the analytical department of the Ukrainian Union of Dairy Enterprises, told the local publication Telegraph.

In July 2023, the average farmgate price of raw milk stood at €33 per 100 kg. In November, the price hit €42 per 100 kg, he estimated.

Farmgate raw milk prices in Ukraine equalled 60% of the European average at the beginning of the year. In April, this figure reached 70%, in August 80%, in October 90% and in November-December 95%. Now, the price of raw milk in Ukraine has hit the same level as that of other European countries, Tulush reported.

“In Ukraine, milk is already 3.77% more expensive than in Sweden, 3.38% more than in Slovakia and 10.77% more than in Latvia, and almost reached the average price of Lithuania and Ireland,” said Georgy Kuhaileshvili, an analyst with the Ukrainian association of milk manufacturers.

Ukrainian dairy products are no longer attractive to European customers at the current prices, Kuhaileshvili admitted.

Sky-high milk prices

A raw milk shortage in Ukraine persists – the price hit €50 per 100 kg in recent weeks, which dairy processors describe as ‘insanity’, according to the Telegraph.

“This puts processors at the level of zero profitability. The situation in the dairy industry is the worst [among all agricultural sectors]. It’s truly a disaster,” said Tulush, adding that, in his opinion, the time for authorities to step in has come.

The authorities could encourage milk farmers to boost production. A rise in supply would stop ‘the mad race’ amongst processors to load their capacities. For example, allotting subsidies of capital costs for building new farms could change the tides in the dairy sector, Tulush said.

In the meantime, the profitability of milk farms which was historically low in Ukraine, is now reaching a record 30-60%, estimated Vadim Chagarovsky, head of the Union of Dairy Enterprises of Ukraine.