Ukrainian Farmers Sell Milk Below Cost, Yet Retail Prices Continue to Rise
The drop in purchase prices began at the end of 2025 and is linked to global market conditions — a decrease in prices for exchange-traded dairy products and an oversupply of raw materials.
In January–February 2026, purchase prices were on average 24% lower than the previous year. At the beginning of March, the price was about 13.5 UAH/kg excluding VAT, which is below the cost price (15–16 UAH/kg).
Farms with less than 500 cows, which account for about 20% of production, are at the greatest risk.
Against the backdrop of cheaper raw materials, retail prices show the opposite trend.
Since December 2025, dairy products have increased in price by an average of 2.5%, with certain items continuing to rise:
- milk (900 ml) — up to 57.78 UAH,
- butter (200 g) — up to 113.39 UAH.
Market participants point to a redistribution of profitability within the "farm — processing — retail" chain. Processors acknowledge pressure from retail chains and a high share of promotional activities: the dairy product market has long been operating "in promo mode". According to their estimates, up to 80% of products are sold at a discount, with some of the discounts effectively being passed on to producers.
Retailers, in turn, deny the presence of excess margins, citing increased logistics, energy, and operational costs, as well as joint financing of promotions.
The situation is already beginning to affect production. In 2025, the dairy cattle population increased, but in February 2026 it decreased by 1,000 heads.
According to industry estimates, if current prices persist, the country may lose up to 800,000 tons of milk annually, creating a risk of shifting from export to import.
