As of December 10, 2023, raw milk prices in Ukraine rose by 81 kopecks (+6%) on average compared to the previous month. Raw milk continues to rise in price due to its limited supply in the domestic market. Despite the fact that industrial enterprises are increasing milk yields and striving to reach pre-war production levels, dairy producers and cheese makers are still experiencing a shortage of raw materials, as consumption of dairy products by the Ukrainian population has increased this year," says Georgii Kukhaleishvili, an analyst at the Association of Milk Producers.
As of December 10, the average purchase price of extra grade milk was 14.61 UAH/kg excluding VAT, which is 83 kopecks more than a month ago. The price range for this grade on farms varies from 14 to 15 UAH/kg excluding VAT. The lower limit of the price range increased by 90 kopecks, and the upper limit increased by 75 kopecks over the past month.
The higher grade costs an average of 14.61 UAH/kg excluding VAT. Over the past month, the price of this grade has increased by 83 kopecks. Prices for higher grade milk range from 14 to 15 UAH/kg excluding VAT. The lower limit of the price range increased by 90 kopecks, and the upper limit by 75 kopecks.
The average price for first grade milk amounted to 13.52 UAH/kg excluding VAT and increased by 77 kopecks compared to the previous monitoring. The minimum price on farms amounted to 12.80 UAH/kg and has not changed over the past month. The maximum price for the first grade amounted to 14.20 UAH/kg, which is 1.2 UAH more compared to the monitoring conducted a month ago.
Accordingly, the weighted average price of the three grades amounted to 14.25 UAH/kg excluding VAT, up 81 kopecks.
Georgii Kukhaleishvili suggests that milk prices in Ukraine continue to rise as demand for raw materials from dairy producers remains high. There are limited stocks of cheese and butter in warehouses as Ukrainians continue to consume dairy products. This year, about one million people who fled the war abroad returned to Ukraine, which naturally led to an increase in the number of milk consumers. Therefore, dairy processing companies are ready to accept orders despite the approaching New Year holidays and the seasonal decline in milk production. Typically, purchasing activity in the dairy market slows down during the New Year and Christmas celebrations. In winter, cow productivity also declines.
The decline in milk yields may be influenced by the decline in the number of cows. Since independence, there has been no effective state program to support and promote the development of dairy farming in Ukraine. The war with Russia has only exacerbated the long-standing problem. Now, many agricultural lands are contaminated with mines and are unsuitable for use as pastures or for growing fodder crops.
Milk is probably rising in price due to higher feed costs, as well as the rise in the cost of production, premixes and other purchased ingredients. Farmers are facing a shortage of skilled labor due to mass migration or mobilization of citizens, and lack working capital and credit. Logistics costs have increased during the war. Dairy farmers do not risk investing in increasing their livestock and other measures that could potentially increase milk yields in Ukraine.
The increase in imports of cream and monolithic butter may restrain the growth of raw milk prices. In this scenario, warehouses will be filled with dairy products, and demand and prices for raw materials will stabilize. Today, Ukraine is not the only country in the world where raw milk prices are rising. More detailed information about the trends of the global dairy market can be found in the material "Dairy Map of the World-2023", prepared by the analytical network of dairy products research IFCN at the end of 2022. You can download the material on the IFCN website at the link: https://ifcndairy.org/world-dairy-map/
Press service of the Association of Milk Producers