The latest
USDA annual report for Ukraine’s dairy sector makes interesting reading, particularly
if you’re milking cows in Western Europe.
Here’s some highlights.
Fluid milk
production in Ukraine is expected to continue to decrease in 2016-17 because of
a lack of foreign markets for Ukrainian dairy products, low world market prices
and increased competition in the region although fluid milk production may
start to stabilise in 2017 as no new market shocks are expected.
A decrease in cow number will continue a two-decade trend although accompanied by increased
productivity.
Being
relatively low-efficient producers, rural households use a low-cost production
model with a lot of seasonal grazing and minimum usage of expensive feeds or veterinary
medicine.
The quality
of milk from household’s remains quite low however Ukrainian dairy processors cannot
avoid using household milk due to insufficient quality (the report says quality but I guess they mean quantity) of industrially produced
milk.
In 2015, 32%
of milk sold for processing came from households.
Exports of
almost all processed dairy products to Russia, which was a major market for Ukraine, stopped in 2014 and is not expected
to recommence anytime soon.
EU has
partially opened its dairy market for Ukrainian dairy products under the Deep
and
Comprehensive
Free Trade Agreement.
The European
Commission has cleared 14 Ukrainian milk and dairy companies as authorised
exporters to the EU.
Ukrainian companies have only conducted test shipments to
the EU, market development will take some time as traditional Ukrainian products
are very different from those demanded by EU consumers.
Ukraine will
continue to export dried dairy products and butter to utilize excess milk
supply.
Industry’s
efficiency will be improving due to increased investments in industrial milk
production.