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Ukraine: Milk production continues to decline

 

Milk production in Ukraine continues to decline. Less milk is produced not only in rural households, but also in agricultural enterprises. 

In April, both production and sale of milk by agri enterprises decreased by about 4% compared to April last year.

This dynamics can be explained by lowering of the level of operating profitability in milk production, which this spring fell significantly due to pressure made by procurement prices and expensiveness of forage. High grain prices due to the lockdown measures and related restrictions, «soybean amendments», the prognosed growth in price of fertilizers — all these factors directly or indirectly affect the attractiveness of milk production.

According to calculations made by Infagro, in the secondhalf of May the operating margin of milk production in highly productive enterprises was approximately 15%, and for the entire category of agricultural enterprises it was on average at zero.

The official statistics of milk production for four months indicates a decrease in milk production in Ukraine by 3.6% compared to the same period last year. In households production declined by 4.8%, in agricultural enterprises 1.2%.

As of May 1, in Ukraine there were 1,783 thousand cows, that is, minus 6.6% compared to last year.

Compared to the European spot market, raw milk in Ukraine is more expensive. When converted to basic indicators of 3.8% fat and 3.2% protein, the average Ukrainian price corresponds to 0.29−0.31 EUR/kg without VAT, while the spot prices in Western Europe after strengthening are 0.25−0.27 EUR/kg.

INFAGRO

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