Dairy market 2025: how much does raw material cost and will prices for popular products soar?
22 October 2025 18:00
EXCLUSIVE
In Ukraine, there has been a moderate rise in prices for dairy products, especially whole milk (milk, kefir, yogurt).
What will happen to the prices of these popular Ukrainian products in the future and what trends are currently prevailing in the dairy market? "Komersant Ukrainian" in an exclusive commentary, Olena Zhupinas, Deputy Director General of the Association of Milk Producers, told.
According to her, the rise in price of dairy products has not yet reached a large scale.
“There is a slight rise in price, especially for whole milk products. But we believe that this is a temporary phenomenon,” explained Zhupinas.
“That is, it is not a wave of inflation across the entire category, but a short-term price movement under the influence of certain factors.
The global environment is pressing down, and exports are becoming less attractive
The key reason why producers do not see room for further sustainable price growth domestically is the foreign market. Global quotations of dairy products, especially butter, have declined.
“Under the pressure of lower prices for dairy products in the world, especially butter, exports from Ukraine… are not interesting,” explains Zhupinas.
The expert clarifies that, despite the increase in EU quotas, it has become more difficult for Ukrainian processors to sell their products abroad at prices that compensate for internal costs.
The marker used is the EU butter price.
“Prices in the European Union have dropped from 7 euros per kilogram to 5 euros per kilogram,” the Deputy Director General of the Association of Milk Producers cites a specific example.
“Under such dynamics, the window of opportunity for exports is narrowing, and producers are forced to reorient most of their volumes to the domestic market, where competition between brands keeps prices from rising for a long time.
Energy factor and how it affects the cost of dairy products
The only significant driver of a possible further increase is more expensive electricity due to blackouts. Processing plants are forced to switch to generators, which immediately and significantly increases costs.
Due to blackouts, they are switching to alternative sources… the cost of an energy unit will increase by 2-3 times,” predicts Olena Zhupinas.
“This affects the production cost of pasteurization, packaging, cooling and the logistics “cold chain”.
The same logic applies to retail. If retailers are running on generators, operating costs temporarily increase, which can push up shelf prices to a limited extent. At the same time, this effect is situational and usually smooths out as the power supply stabilizes.
The situation is the same in stores, where dairy products need to be stored in refrigerators to be preserved, and this requires electricity. Only under this pressure, a slight price increase is possible,” the expert summarizes.
Raw materials become cheaper and become the foundation against inflation
The basic factor that keeps prices down is the lower cost of raw milk. According to Zhupinas, “due to the decline in the price of the main raw material, i.e. raw milk, we do not expect any price increase.”
When the raw material component becomes cheaper, processors have no economic basis for long-term price increases, especially in the context of weaker consumer demand and high price sensitivity of households.
Read also: A jump in prices for raw milk is expected in Ukraine
No shortage, oversupply: what is happening with butter in Ukraine
The coming months will be crucial for butter prices. Export channels are narrowed, so the domestic market, on the contrary, may receive additional supply.
And the price of butter will even decline, because there is nowhere to export it. And our processing companies will try to sell more butter within the country,” predicts Olena Zhupinas.
“Speaking in the language of the market, this means the following: when sales channels are squeezed, competition for the Ukrainian consumer becomes tougher, and the price is likely to go down.
Where will the price ceiling for dairy products start?
The ceiling for potential price increases is determined not by demand but by energy costs during blackouts.
“By the end of the year, prices may rise only under the pressure of rising energy costs at processing plants,” says Zhupinas.
“That is, even if a price increase does occur, it will be limited and pointed, and will mainly affect goods with high energy intensity of storage and logistics (chilled dairy products with short shelf life).
Watch us on YouTube: important topics – without censorship
What does the situation on the dairy market mean for consumers and businesses?
For the average consumer, this means short waves of price increases during peak periods of energy instability and potentially cheaper butter due to the redistribution of flows from exports to the domestic market. In the whole milk category, some adjustments are possible, but the sector does not expect a widespread rise in prices.
For processors, the main managerial challenge is operational flexibility: how to balance production plans with the risks of blackouts and not lose margins.
For retailers, it is the energy efficiency of the cold chain and work with promotions to keep traffic and the average check up without aggressively raising prices. Given the customer’s price sensitivity, the focus will be on SKU optimization, private labels, and promotional offers.
Currently, the picture on the Ukrainian dairy market is as follows: the current slight rise in prices is temporary and is being offset by global prices and cheaper raw materials.
There is no solid basis for an inflationary trend in the medium term. The price corridor for the rest of the year will be determined by energy risks: if blackouts are short and controlled, price increases will remain localized and short-lived.
However, when it comes to the price of butter, a slightly different logic needs to be taken into account. The transfer of volumes to the domestic market creates the preconditions for lower prices, and consumers are likely to feel it on the shelf.
In general, the industry’s position is reduced to a combination of two theses voiced by Olena Zhupinas:
- we expect prices for dairy products, especially butter, to decline;
- prices may increase only under the pressure of rising energy costs.
In practical terms, this means short-term volatility without a long-term upward trend.
Read us on Telegram: important topics – without censorship
