Dairy prices may rise this fall: AVM cites the reasons
5 August 15:01
Prices for dairy products in Ukraine may rise by 5–10% by the end of summer and during the fall and winter, according to the Association of Milk Producers (AVM), as reported by "Komersant Ukrainian".
“The dairy industry is operating amid rising production costs, which creates the conditions for a price adjustment for dairy products. In Ukraine, dairy product prices are likely to rise by 5–10% by the end of summer and during the fall and winter,” the statement said.
The association explained that retail prices are affected by rising prices for diesel fuel, electricity costs, packaging materials, and logistics, as well as currency exchange rate fluctuations.
At the same time, as the Association notes, demand for dairy products is slowing due to a decline in consumer spending
“Food sales in Ukrainian retail chains have slowed. The factors that previously stimulated consumer spending in Ukraine—including high inflation expectations, wage increases, and budget payments funded by international financial support—have run their course. Forced emigration and mobilization have led to a labor shortage, which 69% of Ukrainian companies are facing. The decline in the number of consumers among the working-age population has contributed to a slowdown in domestic demand for dairy products,” the report states.
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According to the association, the average price of pasteurized milk with a fat content of up to 2.6% in plastic wrap in July was 48.76 UAH/kg, which is 1.5% higher than a year ago. Kefir with 2.5% fat content in plastic wrap rose in price by 9% over the year, to 59.53 UAH/kg.
“Ukrainian” cheese with 50% fat content rose in price by an average of 6%, to 607.26 UAH/kg. The average price of Ukrainian-produced butter with a fat content of 72.5–73% rose by 3% over the past year—to 592.09 UAH/kg—although it fell by 1.3% over the past month.
In addition, as noted, a significant increase in cheese imports from Europe to Ukraine, against the backdrop of a seasonal decline in consumption, has intensified competition in the domestic market. Domestic cheese producers are forced to cut back on production volumes.
“European cheeses remain cheaper than their Ukrainian counterparts. Promotional offers help stimulate buyer activity, but they often offset the profitability of domestic cheese sales. Without expanding export opportunities and improving competitiveness, it is more difficult for Ukrainian producers to compete with cheaper European products in both domestic and foreign markets,” the association notes.
The association forecasts that the price of butter will remain largely unchanged, as supply exceeds demand and opportunities to sell off surpluses remain limited. Exporting butter to EU member states remains economically unprofitable for most Ukrainian producers. Domestic butter prices do not fully cover production costs. The packaged butter segment may remain profitable if sales are organized effectively.
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