Ukraine's Dairy Sector Appeals for Urgent State Aid Amid Raw Material Shortages
Source: The DairyNews
Dairy processors in Ukraine are urgently seeking state support as they grapple with raw material shortages and a surge in imports that are impeding their operations.
A scheduled hearing in the Ukrainian parliament on February 8 will address the dairy industry's current challenges, with a primary focus on a sharp deficit of raw milk, according to Arsen Didur, executive director of the Ukrainian Union of Dairy Industry Enterprises.
The cow population in Ukraine declined by 4% to 1.29 million heads in 2023, exacerbating the shortage of raw milk and driving prices higher along the entire value chain. For instance, the average price of butter in the Ukrainian market surged by 40% last year. The situation is putting immense pressure on the dairy processors, with an average capacity utilization ratio of 50% to 60%, impacting production costs and competitiveness.
Without urgent state aid, Ukrainian milk companies may struggle to modernize production capacities and maintain operations at the previous year's level. The National Security and Defense Council of Ukraine has issued a decree for a 10-year development plan to prevent further deterioration in the dairy industry. The lack of state support could jeopardize food security in Ukraine, leading to a gradual weakening of the industry.
Arsen Didur emphasized the need for state support to stimulate milk production, increase livestock numbers, and prevent a constant deficit, which would otherwise result in higher raw material prices. Failure to address these challenges may lead to a loss of foreign markets and a significant impact on the domestic market.
However, the 2024 national budget in Ukraine does not allocate additional funds to support the dairy business. Any approved aid for the sector may not be available until 2025, raising concerns about the ability of the strained national budget to afford subsidies for milk manufacturers in the meantime.
The cow population in Ukraine declined by 4% to 1.29 million heads in 2023, exacerbating the shortage of raw milk and driving prices higher along the entire value chain. For instance, the average price of butter in the Ukrainian market surged by 40% last year. The situation is putting immense pressure on the dairy processors, with an average capacity utilization ratio of 50% to 60%, impacting production costs and competitiveness.
Without urgent state aid, Ukrainian milk companies may struggle to modernize production capacities and maintain operations at the previous year's level. The National Security and Defense Council of Ukraine has issued a decree for a 10-year development plan to prevent further deterioration in the dairy industry. The lack of state support could jeopardize food security in Ukraine, leading to a gradual weakening of the industry.
Arsen Didur emphasized the need for state support to stimulate milk production, increase livestock numbers, and prevent a constant deficit, which would otherwise result in higher raw material prices. Failure to address these challenges may lead to a loss of foreign markets and a significant impact on the domestic market.
However, the 2024 national budget in Ukraine does not allocate additional funds to support the dairy business. Any approved aid for the sector may not be available until 2025, raising concerns about the ability of the strained national budget to afford subsidies for milk manufacturers in the meantime.
