Market trends

Background

Ukraine: Thousands of dairy farms to be built

Up to 5,000 new dairy farms could be built in Ukraine by 2027 with a UAH 1 billion ($18 million) grant provided by the UN, Mikhail Korilkevich, president of the Ukraine Cooperative Federation said.

Korilkevich spoke at a press-conference in Kiev on 13 February. The programme is being pushed in order to drive the Ukraine dairy industry out of a deep depression.

In 2019, we saw a worsening of the crisis in the dairy industry. The shrinking population of dairy cows gained momentum, resulting in falling production of raw milk,” - Kiev-based think tank Economy Discussion Club

The new farms could add UAH 12 billion ($215 million) to Ukraine’s GDP, Korilkevich said. The new programme would focus on so-called backyard or family farms. The target is to establish state-of-the-art farms, which could become a basis of the future development of the Ukraine’s dairy industry, he added.

UN is interested in developing the dairy industry in Ukraine because the country has one of the world’s lowest production cost per litre of milk, Korilkevich explained. The new programme is one of the measures aimed at increasing global milk production by 2030 in order to meet the growing demand, he added.

The overall population of dairy cows in Ukraine decreased by 5% to 3.6 million heads, with 2.5 million. Photo: Henk Riswick
The overall population of dairy cows in Ukraine decreased by 5% to 3.6 million heads, with 2.5 million. Photo: Henk Riswick

Abysmal records

Ukraine milk production shrank to 9.8 million tonnes in 2019, hitting the lowest level since independency, a research conducted by the State Statistical Service Gosstat estimated. Due to this, Ukraine cut export of dairy products by 33%, compared to the previous year, to 541,000 tonnes. Import jumped by 90% to 335,000 tonnes, Gosstat estimated.

“In 2019, we saw a worsening of the crisis in the dairy industry. The shrinking population of dairy cows gained momentum, resulting in falling production of raw milk,” Kiev-based think tank Economy Discussion Club said in a statement in early February. “The disruption of raw milk production hampered export supplies and contributed to the increase in imports.”

In 2020, the milk production in Ukraine is set to fall further by 4%, the Economy Discussion Club forecasted. The overall population of dairy cows in Ukraine decreased by 5% to 3.6 million heads, with 2.5 million. 1.1 million are kept at industrial farms and 1.6 million heads at backyard farms.

Ukraine may reduce milk production to 8.5 million tonnes in 2030, Ukraine Institute of Agrarian Economy said in a statement.

Look back in time: In 2015 Dairy Global talked to Andriy Dykun, president of the Association of Dairy Producers about the dairy industry in Ukraine

EU is to blame

The Ukraine government should support dairy industry primarily by introducing some import restrictions, Vadim Chagarovsky, chairman of the Ukraine dairy enterprises union told local news outlet Unian. Ukraine should firstly introduce retaliatory quotas on dairy imports from the European Union (EU). This is common practice in the global trade, he added.

“For example, the US introduced import quota at 2% of their domestic dairy market, while Turkey subjected imported dairy products to 180% duty,” Chagarovsky said, adding that if nothing is done in this regard, in a few years overwhelming import supplies would eventually kill the Ukraine dairy industry.