DAIRY BUSINESS – 2024

XVI All-Ukrainian Conference with International Participation
 DAIRY BUSINESS

 28 November, 2023
 Kyiv, Premier Hotel Rus

Organizers: Infagro, Dairy Union of Ukraine

 

Dear colleagues,

For the 16th time in a row and the third time since the beginning of Russia’s full-scale war against Ukraine, we plan to organize our traditional meeting of the dairy industry professionals. The DAIRY BUSINESS 2024 will be welcoming representatives of the dairy companies, the companies providing ingredients, technologies and services for the industry, Ukrainian and foreign experts, as well as representatives of the government of Ukraine.

The event aims to find ways of solving both old and new problems in the dairy industry. The problems are old, but their solutions must be updated, considering the realities of war and the global geopolitical and economic changes in Ukraine and the world. Some problems need an urgent solution right now. They must be clearly defined, and we must promptly make decisions to take practical actions.

The war will end sooner or later, and Ukraine will celebrate the victory. Therefore, we need to understand the further development of the dairy industry in the process of the country’s accession to the EU and after its full membership in the European community.
We will discuss these issues at the DAIRY BUSINESS conference.

Apart from that, this conference is a long-standing tradition of an annual meeting of dairy industry colleagues for helpful and pleasant socializing.

Milk production and processing

Despite the war and the problems it creates, Ukrainian dairy farmers demonstrate good milk production results. They have successfully increased profits to a level higher than the pre-war one.

According to preliminary estimates 2023, industrial dairy farms may increase milk production to 2.9 million tons. This producer category shows high production profitability (over 40% in the current year), which should contribute to a further increase in milk production. At the same time, smallholders are reducing production very quickly, so the total supply is decreasing. Industrial dairy farms must compensate for this reduction.

Despite the general decrease in production, the volume of milk supplied to processing is increasing. Of course, this year, the pre-war level will not be reached. According to expert estimates, more than 3.3 million tons of milk should be directed to processing this year, 5% more than last year. The increase in the volume of processed milk is associated with the further recovery of dairy consumption by Ukrainians after the noticeable fall in the 2022 crisis. The goal of Ukrainian dairies should be to boost further milk processing to meet the demand and maintain a positive balance in foreign trade.

Dairy consumption

As there are no reliable demographic statistics now, it isn’t effortless to estimate the level of consumption of dairy products. It is still unknown how much of the population remained in Ukraine, how many left the country because of the war in 2022, and how many people returned to Ukraine during 2023-2024. However, the number of Ukrainians who permanently live in the country has decreased by about 5 million. After the Victory, not all current migrants will return to Ukraine, so the industry will need less milk to provide the country’s population with dairy products than before the war.

Despite the demographic crisis, there is a trend that, at first glance, looks a little strange – consumption of industrially made dairy products is recovering quite quickly. Its level will be higher in a few years than before the war. The main reason for such a forecast is the reduced milk supply from households and the switching of a large part of the rural population to the consumption of dairy products bought in the stores.

According to estimates, in 2024, the consumption of industrial dairy products may increase to 3.2 million tons (in milk equivalent), which is almost a quarter more than in the year of the crisis in 2022. However, total consumption is unlikely to exceed 6.5 million tons (2023 level).

Foreign trade

A not-too-significant increase in milk processing against the increased consumption leads to a reduction in dairy exports and a significant increase in dairy imports. In 2022, due to a sharp decrease in consumption, the export of dairy products was above 0.7 million tons in milk equivalent. In 2024, this figure may be lower by a quarter, about 0.5 million tons. Quite the reverse, imports may increase by 28% to UAH 0.4 million. Considering such trends, Ukraine may become a net dairy product importer next year.

To prevent this, industrial dairy farms need to increase milk production more actively, and raw milk prices should be lower than those in the EU so that domestic producers of dairy products can compete with European products. However, the dairies must also make efforts to reduce the cost of production by carrying out organizational reforms and technological reconstruction. Over time, Ukraine should and will be a powerful exporter of dairy products.

The future is in the EU

Ukraine has no alternative to EU membership. It also applies to the dairy industry. Of course, after Ukraine acceded to the EU, new prospects for Ukrainian dairy exports will open up. But, considering the mood of our neighbours (blockades on the import of Ukrainian agricultural products), the European integration process will be pretty tricky. In future agreements, there will be a lot of restrictions on the supply of Ukrainian dairy products to Europe. Therefore, detailed work is necessary to harmonize standards and business processes and protect the interests of Ukrainian dairy farmers.

It will be especially relevant when Ukraine increases its export supply of dairy products. It will happen, if not in the next few years, then definitely after 7-8 years, as Ukraine has a mighty potential for this, and it would be a sin not to use it.

Industrial dairy farms can double milk production in ten years by providing the proper investments. During this time, dairy business people will build new modern dairy plants, modernize existing production facilities, and reach more than 6 million tons of milk processing. At the same time, exporting more than 20% of the dairy will be necessary.

The dairy business in Ukraine has a great future, but we need to work now for this future.

Welcome to the DAIRY BUSINESS conference!

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