Ukraine: Decline in Milk Production Pushes Up Purchase Prices
Source: The DairyNews
The reduction in milk supplies for processing from dairy farms, a sharp drop in milk yield on household farms due to intense heat, and the energy crisis in Ukraine have all contributed to rising prices for raw milk, according to Georgiy Kukhaleyshvili, an analyst at the Association of Milk Producers.
As of August 7, the average purchase price for extra-grade milk reached 14.62 UAH/kg excluding VAT, which is 50 kopecks higher than a month ago. The price range for this grade in farms varies fr om 13.60 to 15.20 UAH/kg excluding VAT. The upper lim it of the price range increased by 90 kopecks over the past month, while the lower limit rose by 40 kopecks.
The average price for higher-grade milk is also 14.62 UAH/kg excluding VAT (+50 kopecks). Prices for higher-grade milk range fr om 13.60 to 15.20 UAH/kg excluding VAT. Compared to the results of the monitoring in the first half of July, the upper lim it of the price range increased by 90 kopecks, and the lower limit rose by 40 kopecks.
The average price for first-grade milk reached 13.52 UAH/kg excluding VAT, which is 32 kopecks higher compared to the price in the first half of July. The minimum price in farms was 12.65 UAH/kg, while the maximum price was 14.05 UAH/kg. Over the past month, the lower limit of the price range remained unchanged, while the upper limit increased by 90 kopecks.
As a result, the weighted average price across the three grades amounted to 14.25 UAH/kg excluding VAT, which is 44 kopecks higher than a month ago.
Georgiy Kukhaleyshvili noted that the reduction in raw milk supplies for processing during the intense heat in July led to another increase in purchase prices at the beginning of August. Prolonged power outages due to the energy crisis in Ukraine, caused by missile strikes by Russian occupiers, led to disruptions in ventilation systems on dairy farms and heat strokes in cows, resulting in a 20-30% reduction in productivity.
The sharpest decline in production occurred on household farms, contributing to the ongoing shortage of raw milk in the market, which the industrial sector cannot fully compensate for. Currently, the profitability of cheese, whey, butter, and cheese product production is declining in Ukraine. Dairy processing enterprises are trying to operate with minimal profitability.
It is likely that the insufficient quantity of milk supplied from dairy farms, as well as the rising cost of dairy fats, will contribute to further increases in raw milk prices in the second half of August. The prospects for price growth in September will depend on consumer demand and purchasing activity in the domestic market. The rising cost of raw materials and long-term increases in energy costs are likely to affect the prices of fresh dairy products in the domestic market.
Approximately 70% of the milk that goes for processing is consumed domestically, with about 50% of this volume used in the production of fresh dairy products. It is possible that the low purchasing power of the population during the war could restrain price growth in the fall. Additionally, significant stocks of powdered milk in warehouses in Ukraine may also help stabilize purchase prices if dairy processing enterprises begin reconstituting it for processing needs in case of a significant raw milk shortage in the fall.
Press Service of the Association of Milk Producers
The average price for higher-grade milk is also 14.62 UAH/kg excluding VAT (+50 kopecks). Prices for higher-grade milk range fr om 13.60 to 15.20 UAH/kg excluding VAT. Compared to the results of the monitoring in the first half of July, the upper lim it of the price range increased by 90 kopecks, and the lower limit rose by 40 kopecks.
The average price for first-grade milk reached 13.52 UAH/kg excluding VAT, which is 32 kopecks higher compared to the price in the first half of July. The minimum price in farms was 12.65 UAH/kg, while the maximum price was 14.05 UAH/kg. Over the past month, the lower limit of the price range remained unchanged, while the upper limit increased by 90 kopecks.
As a result, the weighted average price across the three grades amounted to 14.25 UAH/kg excluding VAT, which is 44 kopecks higher than a month ago.
Georgiy Kukhaleyshvili noted that the reduction in raw milk supplies for processing during the intense heat in July led to another increase in purchase prices at the beginning of August. Prolonged power outages due to the energy crisis in Ukraine, caused by missile strikes by Russian occupiers, led to disruptions in ventilation systems on dairy farms and heat strokes in cows, resulting in a 20-30% reduction in productivity.
The sharpest decline in production occurred on household farms, contributing to the ongoing shortage of raw milk in the market, which the industrial sector cannot fully compensate for. Currently, the profitability of cheese, whey, butter, and cheese product production is declining in Ukraine. Dairy processing enterprises are trying to operate with minimal profitability.
It is likely that the insufficient quantity of milk supplied from dairy farms, as well as the rising cost of dairy fats, will contribute to further increases in raw milk prices in the second half of August. The prospects for price growth in September will depend on consumer demand and purchasing activity in the domestic market. The rising cost of raw materials and long-term increases in energy costs are likely to affect the prices of fresh dairy products in the domestic market.
Approximately 70% of the milk that goes for processing is consumed domestically, with about 50% of this volume used in the production of fresh dairy products. It is possible that the low purchasing power of the population during the war could restrain price growth in the fall. Additionally, significant stocks of powdered milk in warehouses in Ukraine may also help stabilize purchase prices if dairy processing enterprises begin reconstituting it for processing needs in case of a significant raw milk shortage in the fall.
Press Service of the Association of Milk Producers
23.09.2024
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