Ukrainian dairy industry shows resilience

The Ukrainian State Statistical Service estimated that at the end of 2022, 43 dairy companies (11%) reduced operations. Almost all were based in the eastern and southern regions, Luhansk, Kherson, Mikoliv, and Kharkiv – those most heavily impacted by the war.

Although some capacities were lost, milk processing last year showed only a moderate decline in production performance, the Ukrainian Union of dairy companies estimated. In 2022, it totalled 2.93 million tonnes, against 3.2 million tonnes in 2021. Still, across the board, the dairy industry output last year slumped 22%.

For instance, fermented milk production stood at 112,000 tonnes compared with 178,000 tonnes in the previous year. Butter production dropped to 60,000 tonnes from 64,400 tonnes, and cheese to 89,000 tonnes from 106,500 tonnes, the Ukrainian Union of dairy companies estimated. The only segment where output remained close to the figures of the previous year of 34,000 tonnes is dry milk.

Dairy production

Several Ukrainian dairy companies reported that they saw their production bouncing back in 2023 compared with the previous year, according to the Ukrainian publication Telegraph.

One of the largest Ukrainian dairy companies, Milk Alliance, during the first 5 months of 2023, boosted output of the sour cream segment by 50%, sour-milk cheese by 37%, cheese by 27%, and milk by 25%, Sergey Vovchenko, chairman of Milk Alliance said.

Last year, exports played a substantial role in bolstering the Ukrainian dairy industry. In 2023, Milk Alliance said European restrictions against Ukrainian dairy exports forced the company to adjust operations. In addition, supplies to Kazakhstan, another major sales market for Ukrainian dairy products, plummeted due to logistics difficulties and fierce competition with Russian factories.

Milk Alliance, however, managed to ramp up production thanks to a growth in demand on the domestic market, Vochenko said, adding that the company’s factories now process 100 tonnes more milk per day compared with the same period in the previous year.

Ukrainian think tank Infoagro forecasts that Ukrainian milk processing plants should handle 2.8 million tonnes of milk this year, which is 12% less than in the previous year. Despite the decline, analysts claimed that given all the challenges, it will be a good result.