25 years ago Ukraine was ranked 6th in the world by cow’s milk production. Now it faces the threat of shortage of milk.
The reasons are annual reduction in the number of cows and a decrease in milk production, which have continued almost every next year since 1990. In 2019 for the first time the volume of milk production will have fallen below 10 million tons, which confirms the data of the recently published “Forecast of milk production in Ukraine until 2030: methodology and calculations,” says Olga Kozak, Ph.D., Lead Researcher for the Department of Economics of Agricultural Production and International Integration of the National Research Center “Institute of Agrarian Economics ”.
According to Olga Kozak, this year domestic shortage of raw milk can be indicated, first of all, by the increase in the purchase price of raw milk, which over the past three months has practically corresponded to the world level and exceeds it by 10-15% depending on the month compared to last year. In October 2019, it reached a maximum in UAH for the period of independence of Ukraine.
In addition, fir dairy processors the scale of the raw milk collection has significantly expanded. Usually it was up to 300 km, now sometimes it reaches a distance of up to 600 km.
Another sign of the shortage of raw milk in the domestic market is exports decline and growth in imports of dairy products.
Dairy processing plants are first who feel the lack of high-quality milk. Last year 4179.2 thousand tons of milk were supplied to domestic dairies for processing. Comparing to the previous year, in 2019, according to forecasts of scientists from the Institute of Agrarian Economics, processors will receive 10% less.
The expected decline in raw milk production can be a record low since 2008, said Olga Kozak. At the same time, she noted, that for households a decrease in sale of milk for processing has been a stable trend for more than 10 years. At the same time processing enterprises have shown a steady increase in supplies for almost the entire period. This year, this trend has been broken.
Agricultural enterprises have the opportunity to increase the volume of raw milk, says Olga Kozak. The purchase price, which is currently higher than the world one, should have stimulated them to increase production of high-quality raw milk. But those who have the necessary capacity for increasing production have frozen in anticipation of the opening of the agricultural land market. Weak enterprises, not being sufficiently motivated, continue to slaughter cows and curtail milk production.
In 2020, these processes will only be intensifying and cause structural changes in all components of the dairy food system.
The situation will also be complicated given the cancellation of the second grade of milk from January 1, 2020 in accordance with the new DSTU “3662: 2018” Raw cow’s milk. Technical conditions. “ This means that processing enterprises will receive 1 million tons of second-class milk less.
A shortage of raw milk in the domestic market may cause systemic threats, Olga Kozak warned. Indeed, the modern global food market reacts very quickly to the shortage of any product, trying to fill it with imports and earn money.
The specifics of the milk market is that this import will not be raw milk, but finished dairy products. The presence of large milk producers in the neighborhood countries allows to forsee quite realistic scenarios for the development of events that may have negative consequences for dairy sector of Ukraine.
Olga Kozak summed up that having all the necessary conditions and resources for development of dairy farming, Ukraine faced a threat to food security and a challenge to the state’s food policy.
Olga Kozak, Ph.D, Lead Researcher at NSC IAE, IFCN representative in Ukraine