Ukraine’s raw milk price is not the lowest
In Ukraine the high season of production has begun. Cows are moved to pastures and milk production has essentially increased. This fact does not especially please farmers.
Additional supply is not demanded. It would be enough those volume offered earlier for domestic market. Milk is too expensive for processing into seasonal export-oriented product (butter, milk powder, casein). Farmers do not want to believe processors. They say now Ukrainian milk is the cheapest in the world. The price is at EUR 0.19/l for milk from agricultural enterprises, which is a half of the price in 2013. Farmers believe if the prices fall further, the number of cows will be reduced.
Indignation of farmers is understandable, but processors have no other way out either. In conditions of promptly declined prices of import demand for milk powder, butter, casein, with present level of milk prices they should work at loss too. Very few of them may afford that. Therefore processors either will buy milk at favourable price, or will not buy it at all. So, farmers should think, what of these two bad options is worse.
For example, now production cost of SMP makes USD 1900 at many plants, and importers are ready to pay only USD 1600/t. Who will compensate 300 dollars to processors? Those who have financial possibilities still can stockpile the products till better times. But there are not many such rich operators. Processors need circulating assets, at least for raw milk.
Just the same, not bright prospects are now on the markets of butter, WMP, casein, whey powder. Export prices are strongly decreased for all these products, and they still will be lower soon. Cheeseis out of the question.
At the best an improvement of market conditions is possible only by the middle of summer. Not all operators will be able to stay on the market till that time. If there are no cheap milk, many of them will stop production.
Some operators believe that devaluation of hryvnia may settle somehow a difficult situation. But that is only temporary solving of the problem, if it is possible to call it solving at all.
Officials see the problem only in allegedly collusion of processors, who want to make profits reducing the milk prices.
But actually not only milk operators are unlucky this year. War and unprecedented economic crisis will destroy business of many, even strong, businessmen.