ANDRIY YARMAK, economist FAO (TCIN): compliments and greetings to dairy farmers and processors

In 2018, those Ukrainian professional milk producers who were unable to increase production efficiency became 14.1% poorer. This assessment takes into account only losses from changes in feed prices and lower prices for milk – these are the two factors we use to calculate the Ukrainian Milk Index (UMI).

But in 2018 UMI is by 13.7% higher than in 2016, and as much as 23.3% higher than in 2015. But those were really hard years when Ukraine lost almost the only sales market, and when the world prices of milk fell to record low levels.

Why did we get a reduced UMI in 2018?

The main reason is the rise in price of concentrated feed by 21.6% compared to 2017. Another factor is external: world prices for dairy products were on average 5% lower than in 2017: cheese fell by 6%, milk fat by 8%, and protein by 4%.

And what about the Ukrainian processors? Indeed, in past years they were the weakest link in dairy chain, because they were very slowly adapting to new realities.

This year I will make a few compliments to processors. I think that we have made a significant breakthrough, not a quantitative, but a qualitative one! Ukraine has increased exports of more expensive high quality dairy products to rich and stable countries with the market that was stagnating and when the prices weere low. This lays the foundation for a successful business for many years.

I am pretty sure that in 2019 the first cooperative dairy plant will be launched. I know that I promised this a long time ago, but our farmers are conservative and do not know well how to negotiate. But we are already approaching this moment! And in 2020 there should be at least two of such plants. Perhaps in 2021. I’m not talking about small plants, but about a national player with an eye on leadership.

I really like how the theme of small craft industries is developing. We have been promoting it for a very long time! I am very glad that we now have a portal, which writes about such things, popularizing this niche. After all, small local enterprises producing high-quality local product are always a great pride of the local population.

Example – “Plemzavod Stepnoy”. Try their dairy products once and you will never refuse eating them! This is why there is always a queue to buy them.

And what about our dairy farmers? Though they earned a little less, almost all of them have significantly increased their efficiency! It is nice to see that now in leading farms the productivity is already at the level of the US dairy farms, and the number of such enterprises is growing. Even this year, with a decrease in revenues, efficient producers with extra-grade milk were with good profits.

And most importantly, extra grade is a single standard that a professional milk producer must produce if he wants to be successful. I am very pleased that the years of efforts to promote the philosophy of quality milk as a raw material and a quality product has given results! So, trust in own dairy products is growing.

Happy New Year 2019, my milkmen friends!

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