Ukrainian dairy farmers, especially small family farms, struggle to survive
Because much of the attention is focused on how Ukraine will export grains and oilseeds, less attention is paid to other agricultural sectors like dairy. Yet the consequences of the war on Ukraine’s dairy industry, which is the country’s second largest agricultural sector after crops, are devastating.
The majority of dairy farms in Ukraine are family owned, with industrial farms accounting for around 30% of the total. Before the war, 10 regions – now occupied by Russia – produced 42% of the total volume of raw milk. Since the start of the Russian invasion, Ukraine has lost around 100,000 cows. In the occupied territories and territories close to military hostilities, milk production fell by 50%.
Currently, 37 Ukrainian milk processing plants are located in the occupied territories. One of the largest factories in Kupyansk (Kharkiv region), specializing in the production of canned condensed milk, is occupied by Russians and has ceased operations. As a result, a large number of dairy producers lost their buyers.
A troubled industry
The dairy industry is experiencing the same logistical problems as grain exporters (blocked ports, rail limitations, shortage of trucks and drivers).
Milk producers and processors are caught in a financial trap. Supermarkets are delaying or even stopping payments to processors, which means they cannot pay milk producers. Supermarkets are also in dire straits as major dairy consumers have fled Ukraine. It is currently estimated that more than 8 million people have left the country, 90% of whom are women and children.
The population’s income also dropped drastically due to the war, which aggravated the drop in demand. Thus, dairy producers and processors experience a lack of working capital. In some cases, milk processors accumulated such large volumes of dairy products that they refused to buy raw milk from producers.
Dairy producers are in a difficult situation. More than 800 large industrial dairy producers are affected by the consequences of the war. Almost all producers face shortages of fuel, spare parts, animal feed and veterinary drugs. Since insemination services are mostly inaccessible, many producers are forced to use natural methods to maintain their herds.
In addition, the workforce on dairy farms has undergone a drastic change. Many workers have moved abroad or to safer areas. Some were drafted into the army or enlisted as volunteers. Thus, there is a shortage of experienced operators, forcing dairy farmers to hire inexperienced workers.
Even before the war, the Ukrainian dairy industry was struggling. Around 30% of the milk produced in Ukraine met the minimum quality requirements and was considered tolerable by European standards. Only five Ukrainian milk processing factories have been authorized to export their products to the European Union. The main export products were skimmed milk powder, butter, condensed milk and dry whey. However, the standards of countries in the Middle East, where Ukrainian products are also exported, are a little different, so Ukraine can ship products without meeting European standards.
Ukrainian dairy farmers, especially small family dairy farms, are struggling to survive. They are looking for alternative ways to stay in business, such as starting their own transformation and selling directly to consumers to bypass middlemen. This may prove difficult as investment in production and processing has ceased.