The dairy sector in Ukraine
Structure of dairy farming in Ukraine
Only some 31 agricultural enterprises, representing 0.5% of the total number of livestock farms, keep more than 1,000 cows. It is expected that this will have increased to 6% by 2015. It is expected that by 2015, there will be a considerable increase in livestock farms keeping over 200 cows, mostly at the expense of the very small household farms.
The Ukrainian dairy industry will continue to rely on Ukrainian households for supplying the majority of raw milk. By the middle of 2007, the industrial farm / private household production ratio reached 18 / 82 (compared to 20.3 / 79.7 the year before). This naturally limits the quality of raw milk that is produced and the efficiency of Ukrainian milk producers and processors. Currently 78% of dairy cows and 51% of young cattle stock is kept in private households.
Almost 79% of agricultural enterprises keep up to 110 cows each, while producing only about 28% of the bulk volume of milk, and only 31 agricultural enterprises (0.5% of their total number) keep more than 1,000 cows. On the long run however, a considerable increase in agricultural enterprises keeping more than 200 cows is predicted. In 2007, milk production in Ukraine decreased, which led to a sudden increase in purchasing prices for milk. Therefore, the prices for milk products increased significantly, sometimes up to nearly 50%! The decrease in milk production was mainly caused by a decrease in cattle numbers. The reason for this was a sudden rise in prices for crops, due to last year’s draught. Some farmers gave up their livestock breeding business, where the return on investment period is two to three years, and started with crop production.
In 2008, the production of dairy products will be limited due to the insignificant growth in the industry milk yield.
The low quality of Ukrainian dairy products has always been the major obstacle limiting expansion on the world market and served as the formal excuse for the Russian dairy ban on Ukrainian products. All quality assurance programs undertaken by the domestic industry have proven to be inefficient. Raw milk quality control at the collection point has been difficult to implement, and it is too expensive to implement quality improving technologies for raw milk at the production site at a large scale. Bacterial insemination, the presence of antibiotics in raw milk and contamination within somatic cells remain the major problems for Ukrainian processors.
The price premium paid for milk procured from industrial production reached 20-30% in some regions of the country, but is insufficient to boost industrial milk production. Prices for raw milk fluctuated significantly in 2007 and are expected to remain high in 2008. During the winter of 2007, prices for household products fluctuated between 1.0 –1.3 UAH/liter and 1.3-1.7 UAH/liter for industrial farms. During the high milk season, prices dropped to 0.85-0.90 UAH/liter for household products and 1.0-1.3 UAH/liter for products produced in industrial farms. In October 2007, the milk procurement price increased to a record high 1.7-1.9 UAH/liter for household products and 2.0-2.2 UAH/liter for industrial products. There were also reports that prices hit an amazing 2.5 UAH/liter in some regions!
Over the first 10 months of 2007, the milk yield per cow was 2,867 kg (for cows held in public enterprises), which is 45 kg less than in 2006.
As for the future, the Ukrainian Ministry of Economy will initiate the reduction of import duties on dairy-beef products. This is reported in the draft law “On alterations to the Custom Tariff of Ukraine” 3525/1/1-08 dated January 25, 2008. This draft law obligates the Ukrainian government to impose import duties for products and goods in accordance with the requirements of the WTO. The Ministry of Economy of Ukraine suggests to reduce the import duty for milk and dairy products from 24.8% to 10.1%. The final decision on this question should be adopted by the July 4, 2008.
| Farms listed according to the number of cows, heads | Number of farms | Number of cows | Milk production | |||
| Number | % | % in total cows stock | Heads per farm | % in total milk production | Tons per farm | |
| Total | 6.043 | 100 | 100 | 126 | 100 | 386 |
| < 50 | 2.678 | 44.4 | 5.4 | 16 | 4.3 | 38 |
| 50 - 200 | 2.087 | 34.5 | 29.4 | 107 | 23.5 | 263 |
| 200 – 400 | 852 | 14.1 | 30.7 | 274 | 29.9 | 819 |
| 400 – 1000 | 395 | 6.5 | 28.8 | 556 | 33.8 | 2.000 |
| > 1000 | 31 | 0.5 | 5.7 | 1403 | 8.5 | 6355 |
Only some 31 agricultural enterprises, representing 0.5% of the total number of livestock farms, keep more than 1,000 cows. It is expected that this will have increased to 6% by 2015. It is expected that by 2015, there will be a considerable increase in livestock farms keeping over 200 cows, mostly at the expense of the very small household farms.
The Ukrainian dairy industry will continue to rely on Ukrainian households for supplying the majority of raw milk. By the middle of 2007, the industrial farm / private household production ratio reached 18 / 82 (compared to 20.3 / 79.7 the year before). This naturally limits the quality of raw milk that is produced and the efficiency of Ukrainian milk producers and processors. Currently 78% of dairy cows and 51% of young cattle stock is kept in private households.
Almost 79% of agricultural enterprises keep up to 110 cows each, while producing only about 28% of the bulk volume of milk, and only 31 agricultural enterprises (0.5% of their total number) keep more than 1,000 cows. On the long run however, a considerable increase in agricultural enterprises keeping more than 200 cows is predicted. In 2007, milk production in Ukraine decreased, which led to a sudden increase in purchasing prices for milk. Therefore, the prices for milk products increased significantly, sometimes up to nearly 50%! The decrease in milk production was mainly caused by a decrease in cattle numbers. The reason for this was a sudden rise in prices for crops, due to last year’s draught. Some farmers gave up their livestock breeding business, where the return on investment period is two to three years, and started with crop production.
In 2008, the production of dairy products will be limited due to the insignificant growth in the industry milk yield.
The low quality of Ukrainian dairy products has always been the major obstacle limiting expansion on the world market and served as the formal excuse for the Russian dairy ban on Ukrainian products. All quality assurance programs undertaken by the domestic industry have proven to be inefficient. Raw milk quality control at the collection point has been difficult to implement, and it is too expensive to implement quality improving technologies for raw milk at the production site at a large scale. Bacterial insemination, the presence of antibiotics in raw milk and contamination within somatic cells remain the major problems for Ukrainian processors.The price premium paid for milk procured from industrial production reached 20-30% in some regions of the country, but is insufficient to boost industrial milk production. Prices for raw milk fluctuated significantly in 2007 and are expected to remain high in 2008. During the winter of 2007, prices for household products fluctuated between 1.0 –1.3 UAH/liter and 1.3-1.7 UAH/liter for industrial farms. During the high milk season, prices dropped to 0.85-0.90 UAH/liter for household products and 1.0-1.3 UAH/liter for products produced in industrial farms. In October 2007, the milk procurement price increased to a record high 1.7-1.9 UAH/liter for household products and 2.0-2.2 UAH/liter for industrial products. There were also reports that prices hit an amazing 2.5 UAH/liter in some regions!
Over the first 10 months of 2007, the milk yield per cow was 2,867 kg (for cows held in public enterprises), which is 45 kg less than in 2006.
As for the future, the Ukrainian Ministry of Economy will initiate the reduction of import duties on dairy-beef products. This is reported in the draft law “On alterations to the Custom Tariff of Ukraine” 3525/1/1-08 dated January 25, 2008. This draft law obligates the Ukrainian government to impose import duties for products and goods in accordance with the requirements of the WTO. The Ministry of Economy of Ukraine suggests to reduce the import duty for milk and dairy products from 24.8% to 10.1%. The final decision on this question should be adopted by the July 4, 2008.
