Blackouts Drive Up Dairy Prices in Ukraine

With 60% of Ukraine’s energy capacity impacted, and DTEK, the largest private power company, operating at only 10% of its normal capacity, energy shortages are expected to worsen during the winter months, potentially leading to outages lasting up to 20 hours per day.

Dairy Production Under Threat

Marchuk emphasized that dairy farmers, despite preparing for power outages in 2022, are now facing severe losses as energy shortages persist. “The entire dairy production chain requires electricity, from milking to storing milk,” he said. A typical dairy farm with 500 cows consumes up to 100 kW per hour, leading to soaring costs as farms are forced to rely on diesel generators. As a result, the cost of milk production has already risen by 3-5%, with further price hikes expected.

Impact on Dairy Products and Returns

In addition to rising production costs, the Union of Dairy Enterprises of Ukraine reported a 20% to 30% increase in dairy product returns, as frequent blackouts lead to spoilage. Some retailers are reportedly passing these losses onto dairy processors, adding additional financial strain to the sector.

Heat and Ventilation Challenges

Power shortages are also disrupting ventilation systems on dairy farms, leading to increased heat stress among cattle and a subsequent reduction in milk production. This, coupled with rising operational costs, is driving up farmgate milk prices, according to Georgy Kukhaleishvili, an analyst at the Ukrainian Association of Milk Producers.

As Ukraine's dairy sector grapples with the ongoing energy crisis, the outlook remains uncertain, with further disruptions and price increases likely in the months ahead.