At the beginning of February, the decline in raw milk prices in Ukraine continued due to falling demand from dairy processing enterprises amid decreasing consumption of dairy products in the domestic market, reports Georgii Kukhaleyshvili, an analyst at the Association of Milk Producers of Ukraine (AMP).
The average purchase price for extra grade milk as of February 10 was 17.40 UAH/kg excluding VAT, which is 1 UAH less than a month ago. The price range for this grade in farms varies from 16.50 to 18.00 UAH/kg excluding VAT. The lower price limit decreased by 2.00 UAH, and the upper limit decreased by 1.50 UAH.
Higher grade milk averages 16.95 UAH/kg excluding VAT (-1.10 UAH). Prices for higher grade milk range from 16.20 to 17.50 UAH/kg excluding VAT. Compared to the monitoring results from the first half of January, the lower price limit decreased by 1.60 UAH, and the upper limit decreased by 1.50 UAH.
The average price for first grade milk was 16.40 UAH/kg excluding VAT and decreased by 55 kopecks compared to the first half of January. The minimum price in farms was 16.00 UAH/kg, down 50 kopecks. The maximum price was 17.00 UAH/kg, down 1.50 UAH.
Accordingly, the weighted average price of the three grades was 17.08 UAH/kg excluding VAT, which is 1.05 UAH less compared to the previous period.
Georgii Kukhaleyshvili notes that the decline in raw milk prices in Ukraine at the beginning of February occurred due to the limited purchasing power of Ukrainians and the decrease in consumption of dairy products in the domestic market. Low demand from dairy processing enterprises and excess raw milk in Ukraine put pressure on purchase prices. Despite Ukraine increasing dairy product exports in January, mainly stockpiles that had accumulated in December and early January were shipped. Therefore, the increase in exports this time did not lead to increased demand for milk from dairy processing enterprises.
It is likely that the preconditions for a sharp decline in raw milk prices in Ukraine were set by the pricing policies of dairy processing enterprises at the end of 2024, which significantly increased prices for finished products, taking advantage of the temporary rise in butter prices in export markets. Ukrainian consumers were not ready for the sharp price increase of dairy products in retail chains. High prices for Ukrainian cheese products contributed to increased cheese imports and reduced consumption of domestic products by the population.
A factor forcing dairy processing enterprises to lower purchase prices is the low technological base. Most dairy factories have not implemented modern deep milk processing technologies and need modernization. Enterprises receive extra grade milk of better quality and higher cost, but produce finished products with the same output standards as when using first grade milk of lower quality. Outdated equipment at dairy processing enterprises is energy-intensive, which increases production costs of finished products.
It is likely that dairy farms may refrain from increasing milk production in 2025, as dairy processing enterprises cannot buy milk at adequate market prices, and further increases in milk yield may lead to further price collapses. According to the previous forecast, the average purchase price for raw milk was expected to drop to 17.10 UAH/kg in April, but under current conditions, a more rapid decrease is likely. In the worst-case scenario, the average price could fall to 16.00 UAH excluding VAT by early March. This price level is unprofitable for dairy farms, considering the rising production costs due to higher feed and energy prices. However, if export market demand is active in February, and dairy product stockpiles in Ukraine are sold off, this could contribute to price stabilization for raw milk in the domestic market.
Over the past few weeks, cattle prices in Ukraine have been rising due to increased live animal exports in December-January. The outbreak of foot-and-mouth disease in the German state of Brandenburg led to a reduction in live cattle exports from the EU. However, demand for cattle in foreign markets is quite active during the preparation period for Ramadan in Muslim countries.
According to AMP monitoring, in the first half of February 2025, the average price for cows below average fattening was 73.00 UAH/kg excluding VAT, for cows of average fattening - 72.00 UAH/kg excluding VAT, and for cows of higher fattening - 70.00 UAH/kg excluding VAT. Compared to January of this year, cows below average fattening increased by 23.00 UAH, cows of average fattening - by 18.25 UAH, and cows of higher fattening - by 12.00 UAH/kg.
Press Service of the Association of Milk Producers
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