Organic Dairy, Ukraine: “Despite the crisis, the industry is resilient”
In this interview we speak to Olena Stretovych, director of Organic Milk LLC in Baranivka in the Zhytomyr region in Ukraine. The enterprise is active in the production of organic certified milk products. Olena talks about what it is currently like for organic production in Ukraine, and gives us an inside view of the company’s journey – from its raw material use and raw milk shortage to its challenges and resilience in the face of war.
What is it like for organic milk producers currently in Ukraine?
Since the onset of the full-scale invasion, the situation in Ukraine has changed drastically, particularly for organic production. The economic downturn, inflation, a lack of funds, and most significantly, forced emigration of 10 million target consumers of organic products, have had a severe impact.
The rising costs of gas, electricity, and other essential expenses make organic products uncompetitive on the market, especially dairy products, which are staple items in the consumer basket. While our colleagues in the non-organic sector can substitute ingredients to decrease production costs, we cannot compromise on the quality of our products, which significantly affects our pricing compared to other producers.
The company uses its own raw materials. What has the journey been in this regard?
Organic dairy processing company Organic Milk LLC uses its own raw materials (organic milk). We are a vertically-integrated mini agro-holding engaged in organic crop and livestock farming. At first we established the companies focused on organic crop and livestock production, which subsequently led to creation of the dairy processing company. This ensures that the control of organic products begins in the field and ends with the finished product. The process of scaling up our raw material base is ongoing. We continue to build and improve our farms.
What are some interesting product trends worth noting on the organic market?
Unfortunately, Ukraine is not currently in a position to observe exciting growth trends in the organic sector. Instead of seeing an expansion of organic products, we are witnessing a reduction. But that doesn’t apply to us! We continuously introduce new products. At the start of our operations, we produced 6 products. Now, we offer nearly 100, with 15 new products added in 2024 alone. We are expanding our range of hard cheeses, semi-hard cheeses, and brined cheeses.
What are the main goals for the company in the near future?
The primary objective is to scale up exports. We currently export to 5 countries, which is 10% of our turnover. The challenges Ukrainians are facing have forced us to change all our plans and business approaches. Initially, our main focus was on the domestic Ukrainian market. Now, we aim to increase exports to 50%. Our organic products are well-received and in demand in other countries. The main hurdle today is crossing borders.
Despite the enormous crisis, the dairy industry is undoubtedly resilient. However, the number of cattle in Ukraine is rapidly declining.”
Does the industry see itself as a resilient one? What are the notable challenges?
Despite the enormous crisis, the dairy industry is undoubtedly resilient. However, the number of cattle in Ukraine is rapidly declining. Small farms are shutting down as many men have been conscripted or continue to be conscripted into the army. Another significant issue is the shortage of raw milk. Over the past year, the price of raw milk has increased by 30%, making quality dairy products in supermarkets unaffordable for most consumers. To cut costs, conventional dairy producers are increasingly replacing animal fats with vegetable fats.
In terms of innovation, where is the industry in comparison to other sectors?
Despite the crises and challenges Ukraine has faced over the past decades, Ukrainians remain an intelligent, innovative, and progressive nation. This applies to our dairy industry as well. Today, you can find any type of dairy product in Ukraine, with various fillings and flavours. Having travelled abroad, I can confidently say that our development is progressing rapidly.
How has the invasion impacted the sector, and how has this affected Organic Milk LLC?
Currently, most large dairy enterprises in Ukraine are operating at a loss. Organic Milk LLC has lost around 30% of its market share, which we are trying to offset through exports. Each month, we see our local customer base shrinking as prices rise. Moreover, the enemy continues targeting critical infrastructure. Power cuts, lack of heating, and disruptions in water supply — all these increase costs and make it difficult to produce goods promptly and to the required standard. The biggest issue, however, is the shortage of labour. Many people are fighting on the frontlines, while others have emigrated.
What positivity do you see in the future of the company?
We won’t give up! Strategically, we are planning, developing, scaling up, expanding our reach, and improving our company. We believe that in the near future Ukraine will take its rightful place among the European countries.
