Dairy Production Sector In Ukraine

Ukraine became independent and took its first steps towards a market economy in 1991.The country continues its transition to market economy and remains very promising in terms of future economic growth and investment opportunities. Compared to other European countries, Ukraine still has a significant potential for further growth of dairy industry. Favourable for the development of livestock climatic conditions, relatively low cost of feed and labour ensure domestic producers all the prerequisites for profitable production and possibility to compete with producers from other countries. In Ukraine, milk producing farms are mostly concentrated in the central and north-western part of Ukraine (Figure 1), and dairy plants tend to follow the same pattern. According to the official statistics, in 2007 Ukraine had about 600 dairy plants and approximately 3,700 milk producing agricultural enterprises. However, these farms produced less than 20% of the national volume of raw milk. The major numbers of cows are grown within so called “individual subsidiary households”. These individual households and small family farms currently are important suppliers of dairy and meat products to local population and to the processing industry. Figure 1.

The population of cows has decreased over the last two years by 17,7%. The decline of dairy livestock was observed in all Ukrainian oblasts, excepted Chernigiv. Positive values of the profitability of milk production have occurred mainly on large scaled farms, which already operate effectively. As a result of this tendency, the most essential increase of dairy livestock has been observed in the companies that already have over 1,000 cows. The production of raw milk in Ukraine has a seasonal pattern (Figure 2). Individual households have much higher supply fluctuations compared to larger dairy farms. This is explained mostly by the fact that the households do not have enough livestock to plan and organize a continuous supply of milk. However, this seasonality of dairy farm production points at another problem – lack of managerial skills on farms.

Nevertheless. some dairy farms in Ukraine are also capable of reaching the productivity level of western nations.Figure 2 Another important point to mention is the low productivity of milk production in agri-enterprises.000 liters of milk. . Now the productivity of dairy livestock is very low as compared to the average productivity in developed countries (Figure 3). Although at a dairy farm an average cow yields 3. the majority of Ukrainian cows do not produce more than 2.1 tons of milk.

000 liters has been constantly on the rise. Milk quality supplied to dairy processing plans by larger agricultural farms is higher than the quality of milk produced by individual households. In 2006. . The share of these agricultural companies is 3. the number of such farms was 181 and in 2007 it rose to 195. The biggest share of this milk was produced by households. As a result of the transition from the Soviet planned to a market economy and the economic crises in the mid-90s. Raw Milk Production In total Ukraine has been producing 12-14 mln tons of raw milk annually over the last 6-7 years. a promising tendency is that the number of enterprises with annual yields per cow exceeding 6. but their share in the total milk production amounts to 13%.6% in the total number of agricultural enterprises. we can maintain the fact that during the last few years according to the official statistics the positive values of milk profitability of dairy farms have been occurring mainly at farms with over 500 heads of cows. The issue of the low efficiency of milk production and lower revenues obtained by milk producers can be explained chiefly by an insufficient optimization and an inefficient use of resources. the share of households in the total raw milk production increased from 24% in 1990 to 82% in 2007 (Table 1). Profitability Of Milk Production Considering the most important tendencies of milk production at agricultural enterprises in Ukraine and outlining the structural changes which are taking place in the milk sector.Figure 3 Along with this.

0 3.4 3. heads: Dairy farms 6.9 2.1 3.9 2.2 3.2 2.4 7.5 1.8 13.6 9.0 13.7 2.2 4.9 3.9 3.7 3. miln.8 3.2 13.4 Yield.4 2002 1.9 2.7 14.5 1995 4.0 Households 2.7 2005 0.9 3.9 Fluid Milk.1 3.6 2.8 13.5 3.1 2003 1.6 Households 5.1 3.6 2.1 3.5 11.2 4.1 3.5 2.8 17.7 2006 0.6 2.3 .2 10. t: Dairy farms 18.7 11.8 3.4 3.9 7.7 2.7 2004 0.7 3.6 3.9 3. miln.8 2.2 2.2 2.1 13.5 3. Characteristics of raw milk production in Ukraine (1990-2007) 1990 Cows in milk.1 12.9 2.6 11.5 10.3 2007 0.7 Total 2.9 Total 24.2 9.2 Total 8.5 10.7 2.2 3.6 2.4 3.Table 1.3 4.3 2. t/cow: Dairy farms 3.2 Households 2.9 2.1 2.7 3.3 2001 1.