Minus 100 dairy farms during the war: how the dairy industry in Ukraine lives today
11 July 15:56
INTERVIEW
During the years of the full-scale war, the Ukrainian dairy industry suffered significant losses: the number of cows decreased, and about a hundred dairy farms ceased operations. Nevertheless, the industry has demonstrated resilience: farm productivity is growing, milk quality is improving, and processing rates have returned to pre-war levels. In an interview with "Komersant Ukrainian", Olena Zhupanis, Deputy Director General of the Association of Milk Producers, explains how producers are adapting to the new conditions, what is happening with exports and prices.
During the years of full-scale war, Ukraine has lost about 100 farms
How do you assess the general state of the dairy industry in Ukraine today? What key trends do you see: production decline, stabilization or gradual recovery?
The stagnation in the dairy industry in Ukraine has been going on for several years, and not even for the first decade. Unfortunately, the dairy industry has shown a decline in both livestock and milk production year after year. The war added a bitter taste to the dairy industry.
Thus, if as of January 1, 2022, there were 1 million 580 thousand cows in Ukraine (the total number of cows, both in private households and on dairy farms – ed.), then as of January 1, 2025, we have 1 million 155 thousand cows. At the same time, it should be noted that the number of cattle in private farms decreased by 371 thousand heads, and on dairy farms – by 34 thousand heads. If we take into account that the average size of a dairy farm in Ukraine is about 300 cows, we can conclude that we have lost about 100 dairy farms during the years of full-scale war.
It is worth noting that dairy farmers are working hard to ensure that Ukrainians have milk. Already in 2024, milk production at dairy farms was 5% higher than in 2023: 2 million 900 thousand tons were produced. This is 7% more than in pre-war 2021. And all this is due to hard work, due to the introduction of the latest technologies, due to the innovations that were introduced before the war and are being implemented now. As a result, the productivity of cows is growing: in 2024, the average productivity on a dairy farm in Ukraine was 8167 kilograms per cow per year. This is 20% more than in 2021.
In addition, the quality and safety of milk has improved. Thus, in 2024, 60% of the total milk mass was processed with extra milk. This is milk that meets European quality and safety requirements. I would like to note that in 2021, there was only 39% of such milk.
If we milk more, then our dairy processing industry is also restoring its processing volumes: in 2022-2023, these figures were lower than in pre-war 2021. In 2024, the processing industry processed 3.2 million tons of milk, which corresponds to pre-war 2021. In 2025, it is planned that 3.4 million tons of raw milk will be processed.
Are there currently any regulatory restrictions or quotas on the production and export of dairy products?
From June 2022 to June 5, 2025, Ukraine enjoyed preferential duty-free and quota-free conditions for exporting dairy products to the European Union. Therefore, during these years, the share of the European Union in our exports has increased significantly.
But, under pressure from its farmers, the European Commission decided to cancel the grace period for Ukraine, and on June 6, 2025, we returned to quotas and duties. For example, the annual quota for butter was 3 thousand tons, and now this quota is 1750 tons by the end of the year.
But there is already information from Ukraine’s negotiation team on trade agreements with the EU to increase quotas. They say, among other things, that the quota for butter will be increased from 3 thousand tons to 7 thousand tons, for skimmed milk powder – from 5 thousand to 15 thousand tons, for condensed milk and natural milk – from 10 thousand to 15 thousand tons. At the same time, the quota for fermented dairy products and whole milk powder will be canceled altogether.
Therefore, we hope that our processing companies will be able to continue to export dairy products to the European Union duty-free.
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Costs are rising, but the milk market is balanced
What are the dynamics of milk production costs in Ukraine? What components have the greatest impact on the price – feed, energy, logistics or other?
The cost of milk production and its growth is a global trend, and it is primarily due to a serious rise in the cost of feed.
Climate change, droughts, and floods, unfortunately, have a negative impact on both the amount of feed and its nutritional composition. That is why we are now tracking the same trend in Ukraine. For example, if we look back to 2024, the cost of milk increased by 30 to 60%, depending on how technically and technologically equipped the enterprise is. On a modern dairy farm, where processes are better organized, the cost of milk production is not growing as fast as on outdated farms.
And this is very important for us. It is the economic component that is important. After all, our dairy producers are currently facing serious challenges of European integration, as we have to adapt the conditions of animal husbandry and welfare to European standards, implement green solutions and ensure biodiversity. And this requires a lot of money.
What is the current balance on the domestic milk market: do we have a surplus, a deficit, or is the market balanced? Is domestic production able to fully meet consumer demand?
Today, the market for raw milk and dairy products is balanced. That is, the amount of milk produced in Ukraine is sufficient for processing. The capacity of Ukrainian dairy processing plants could process about 40% more milk. But they are limited in their sales: domestic consumption has declined, and many Ukrainians, unfortunately, have been forced to go abroad. In addition, we are limited by our export potential: we are partially losing the market of Kazakhstan and the Caucasus due to the rise in logistics costs, as well as competition with Belarus and Russia, where the dairy industry is developing quite strongly.
Logistics to Africa and the Middle East is complicated. In addition, unfortunately, investments in the latest milk processing technologies are limited. Because of this, the Ukrainian dairy industry is not yet able to provide the global dairy market with such popular products as protein concentrates.
As a result, our factories are not “overloaded” with milk, but it would be difficult for them to sell their products if there were more.
By the end of the year, milk prices may rise by 2-5%
What is the forecast for wholesale and retail prices for milk and dairy products by the end of 2025? What factors can affect price changes – and in which direction?
Let’s talk about wholesale prices. I’ll explain why not retail: the fact is that nowadays our retail chains often do not behave quite correctly in relation to processing companies. Although, in fairness, I should note that the Verkhovna Rada’s Agricultural Committee is currently considering a draft law on unfair trade practices that would establish rules of the game that would protect farmers and food producers from the arbitrariness of retail chains.
Therefore, returning to wholesale prices: we do not expect any serious price jump, as we saw in the fourth quarter of 2024. This is primarily due to the low purchasing power of Ukrainians.
Thus, the price of raw milk decreased by 18% in the first six months of 2025 compared to December 2024. At the same time, prices for finished products remained stable.
Therefore, we do not expect a sharp change in prices for finished dairy products. Although, of course, there are factors that can provoke this. These include rising energy prices, which is happening almost every month today, rising wages due to staff shortages, and rising costs of packaging and ingredients due to changes in the euro exchange rate. Let me remind you that most of the packaging materials and other ingredients for dairy products are imported from the European Union. That is, we are tied to foreign currency.
Our forecast is that finished dairy products may grow by 2 to 5% by the end of the year.
What are the key challenges facing dairy farms today – and what support does the EBA provide them with? What requests do farmers most often come to you with?
The main challenge for dairy farms today is to survive the war, when farms and processing plants are under constant pressure. Recovery requires clear financial instruments, as well as adaptation to new European standards in terms of quality, sustainability and ecology.
The EBA focuses on raising awareness of producers about the challenges associated with EU integration, assists with new legislation and requirements, consolidates the position of industrial producers and defends their interests at the national and international levels. It cooperates with the government, parliament and European partners, emphasizing Ukraine’s partnership with the EU agricultural sector.
The EBA also provides humanitarian support to farmers affected by the war – in particular, in cooperation with the Jose Andres Charitable Foundation, more than 60 diesel generators with a capacity of 80-100 kW were transferred to ensure stable operation of enterprises.
Summary
During the years of full-scale war, we lost about 100 dairy farms, but cow productivity increased by 20% and milk quality improved significantly.
The market for raw milk and dairy products is now balanced, but processing plants have limited sales due to reduced domestic consumption and difficulties with exports.
The cost of milk production has increased by 30 to 60% due to rising feed, energy, and packaging costs, and adaptation to European standards requires significant investment.
The European Commission has canceled the duty-free export grace period, but negotiations are underway to increase dairy quotas for Ukraine.
The main challenge for dairy farms is to survive in the war, and the EBA supports producers by raising awareness, advocating and providing humanitarian aid.
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