Over the past 10 years, agricultural enterprises have demonstrated positive results in dairy business, deepening their specialization and concentrating production to develop into large scale producers.
Despite the fact that these enterprises are actively increasing milk production, the overall trend in the country moves downward and, according to the forecasts of the NSC “Institute of Agrarian Economics” scientists, the trend will remain as it is until at least 2030 due to a decrease in milk production in households.
The abolition of the second grade milk, regulated by the new quality standard DSTU 3662:2018 “Cow’s raw milk. Technical conditions ”, which will actually come into effect on January 1, 2020, will increase the decline in milkproduction in households, and the shortage of raw milk intaken by dairy processing plants will most likely have to be covered by agricultural enterprises that have the necessary potential.
To increase in the required volumes of milk, investments will be needed. In turn, investors need verified data on the investment attractiveness of agricultural enterprises, to know where these investments should be directed.
The main indicator for investment is profitability of milk production in agricultural enterprises. This indicator is consistently high. At the same time, dairy farming remains one of the few sectors of the agriculture that provides producers with daily income. The increase in milk production that this category of farms demonstrates, indicates a high growth potential in the near and distant future. Even the long-term return on investment in dairy herd, which for a long time was perhaps the biggest obstacle to investing, thanks to modern technologies, including those introduced in Ukraine, was reduced to 5-6 years.
A significant advantage is the fact that the level of milk consumption in Ukraine (200 kg / person / year) is quite high compared to the world average (117 kg). However, this level could be much higher and reach 380 kg recommended by Soviet scientists, if it were not limited by the purchasing power of the population.
Studies have shown that with an increase in per capita incomes, consumption of milk and dairy products is growing accordingly. Such a clear dependence indicates to investors the prospects, in particular, economic growth will contribute to an increase in milk consumption. It is worth mentioning that the level of consumption of milk in Ukraine is one of the highest in the world, and Ukrainians are considered one of the few nations that consume milk throughout their lives.
The need to increase milk production also exists due to the export of dairy products to the global market. In recent years, the geography of exports has expanded significantly, changing the main Russian vector that had been in the past. Ukrainian dairy products are now exported to more than 90 countries. Export volumes and the number of countries importing dairy products from Ukraine will only grow, which is also a message to invest in this business.
In Ukraine, a large number of different dairy farms with a herd size ranging from 1 to 5,000 cows and more are functioning. To select among such a large number of dairy farms those that are attractive for investment, integral indicators were calculated according to previously selected and grouped financial and economic indicators. It turned out that agricultural enterprises with a livestock of 200 cows and more are attractive for investment. At the same time, according to scientists, the optimal group for investment from the point of view of sustainable development is a group with a number if cows from 200 to 1000 cows. The herd size exceeding this number will conflict with social and environmental components of sustainable development. According to the calculations, farms with a herd of 1,500 cows and more are less attractive for investment compared to the group with a herd size of 200 to 500 cows.