Rescue of the dairy industry. Development strategy for the next 10 years

The dairy industry of Ukraine is in crisis. This topic is actively discussed by leading industry experts, voiced by reputable publications and online news. We often read headlines that the number of cattle in Ukraine is declining, the amount of milk produced is decreasing, and imports are growing every year. This situation requires serious decisions and active action. Moloko Vitchyzny supports all possible initiatives for the development of the industry. Today we will consider the strategy for the development of the dairy sector of Ukraine for the next 10 years, presented on September 25, 2020 at the All-Ukrainian Dairy Forum. The participants of the event had the opportunity to discuss the most pressing topics of the dairy industry – how to preserve Ukrainian livestock, how to protect the domestic market from imported products, what state support is needed for the development of the industry. Among the participants are representatives of the Cabinet of Ministers, leading participants in the dairy market and retail. So, questions, answers, expert opinions, forecasts, suggestions, ways out of the crisis – read in today’s article.

According to Anna Lavreniuk, Vice President of the Association of Milk Producers (AMP), during the All-Ukrainian Dairy Forum 2020, this year the margin of milk production fell to 17%, while, for example, in October-November 2019, this figure was 30-49% (depending on the category of the farm). According to her opinion, the cost of milk production will continue to grow. In the first half of 2020, 1,8 million tons of milk were processed in Ukraine, which is 7,1% less than in the same period of 2019. At the same time, the supply of milk from industrial enterprises increased by 0,8%, and from the population – fell by 15,6%.

Fig. 1 – Milk production in Ukraine by farms of all forms of ownership, thousand tons

In the first nine months of 2020, milk production in Ukraine decreased by 4% (-302,7 thousand tons) compared to the same period last year – to 7,272 million tons.

Fig.2 – Milk production in households, thousand tons

Fig.3 – Milk production by agricultural enterprises, thousand tons

However, the key issue for dairy farming as a business is not milk, but the profitability of this milk. You can milk a lot from one cow every day, but not be profitable due to high feed costs. By the way, among the factors that affected milk production during the three quarters of 2020, in addition to the reduction in the number of livestock, we should highlight the abnormal heat, which directly affected productivity and indirectly due to poor feed quality.

There are a lot of problematic issues. It is now necessary to find possible solutions. According to Vadym Chagarovsky, chairman of the Union of Dairy Enterprises of Ukraine, at the All-Ukrainian Dairy Forum, it is necessary to create a program for the development of the industry. State support for the sector has halved – we have UAH 4 billion. We understand that the existing legal framework for the effective management of dairy farming and the development of dairy processing is not enough. Consider the indicators of the dairy industry over the past 30 years:

Tabl. 1 – The main indicators of the dairy industry in Ukraine on 01.01.2020

The table shows that the indicators for all items decreased several times. Therefore, there is a need to unite all industry associations to prepare a realistic and effective National Program for the development of dairy farming and processing for 2021-2030. At the forum, Vadym Chagarovsky proposed to the government a number of steps to support the industry. Among them: to introduce export subsidies by allocating subsidies per 1 ton of skimmed milk powder at the level of $ 300 and at the same time to allocate from the state budget 3 million dollars to support exports. In his presentation, he cited the following figures: the National Program for the Development of Dairy and Processing Industry for 2021-2030 requires UAH 90 billion over 10 years (UAH 9 billion annually, of which 50% is state support). According to Rabobank’s calculations, 750 million euros need to be invested to increase the production and processing of 1 million tons of milk. Ukraine needs to increase production by 4 million tons of milk. In terms of euros to hryvnias, we have UAH 9 billion a year.

According to the chairman of the board of directors of the Union of Dairy Enterprises of Ukraine, an important prerequisite for the development of the industry is the creation of the National Committee for Dairy Rescue (NCDR), which aims to unite efforts of professional organizations to overcome the crisis in the dairy industry.

This is the view of professionals on the dairy industry and a number of steps that need to be taken. Moloko Vitchyzny  supports the development of the dairy sector of Ukraine in every possible way, so we unite, work and achieve results!

By the way, these dairy associations started implementing these steps directly at the All-Ukrainian Dairy Forum and signed a memorandum “On the establishment of the National Committee for the Salvation of the Dairy Industry.” The committee included the Association of Milk Producers, the Ukrainian Cooperative Federation and the Union of Dairy Enterprises of Ukraine. The Committee is a public formation that has no legal status, it is designed to take care of the main directions and problems in the development of the dairy industry in Ukraine. The main tasks of the committee are: participation in joint project development; dissemination of information about the committee’s activities; appeals with proposals to public authorities, etc.

Thus, by 2030, according to the concept of development, the Ukrainian dairy industry should reach a new level and achieve significant results – experts say:

As you can see, there is something to work on, there is a long way to go, our company Moloko Vitchyzny always supports all opportunities for development, we are not afraid of challenges and difficult tasks, we will do everything in our power to develop the dairy sector. We believe in our country, in our people and the great opportunities of the dairy industry of Ukraine!

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Presentation by Vadym Chagarovsky, Chairman of the Board of Directors of the Union of Dairy Enterprises of Ukraine.

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