Ukraine Faces Potential Raw Milk Shortage Amid Declining Herd and Rising Costs
The key pressure factor is the increase in production costs amid declining purchase prices.
Main drivers:
- Feed costs have risen by 20–30% due to an expensive sowing campaign,
- Increased costs of animal maintenance,
- A decrease in milk purchase prices over the past six months.
As a result, raw milk production has become unprofitable in recent months, prompting some farmers to exit the business.
An additional factor is the rise in dairy product imports:
- Up to 50% of cheese shelves in retail are occupied by imports,
- Butter imports in the first quarter of 2026 have tripled year-on-year.
The main suppliers are EU countries, where production and exports are subsidized, ensuring lower production costs and increasing price competition.
Despite the risk of raw milk shortages, a shortage of finished products in the domestic market is unlikely.
Up to 30% of raw materials are processed into export products. In case of a production decline, exports will decrease, and the released volumes will remain within the country.
In the short term, prices will be restrained by the seasonal decrease in demand during the summer period. However, from autumn 2026, the cost of dairy products is expected to rise by 15–25% depending on the category.
The situation in the Ukrainian market reflects a broader trend:
- Vulnerability of production to price imbalances,
- Dependence on feed and energy costs,
- Pressure from cheap imports,
- Acceleration of industry consolidation.
In the medium term, this may lead to a reduction in the number of producers, a decrease in domestic production, and increased dependence on external supplies.
