Articles
Olga Kozak, IFCN representative in Ukraine, Doctor of Economics, together with Hanna Lavrenuyk, General Director AVM, were speaking on the impact of the war in Ukraine on the global and national milk market during the 24th IFCN International Dairy Conference held in Riga June 10 – 13, 2023.
The speakers noted that the war in Ukraine has become a challenge for all national branches of the economy, including the dairy sector, which suffers from the occupation, destruction of farms and livestock, disruption of production and damage of logistics infrastructure, mined fields, looting of farms by the occupiers, population migration, price fluctuations, blocked ports and many other factors.
Dairy farms located on the occupied territories and in the front-line regions often targeted by the invaders, are particularly negatively affected. In total, about 800 industrial dairy farms were affected by the war, more than 100 were destroyed or significantly damaged.
However, dairy farmers, despite the losses and destruction, did not stop working and did everything possible to preserve/restore and develop the farms. The farms ceased to exist only in one case – when they were completely destroyed.
According to the 2022 daya, the number of cows in agricultural enterprises decreased by 9%, milk production – by 7%.
A peculiarity of the activities of milk producers during the war was strengthening of their social responsibility, primarily to the residents of the territorial communities. All the farms of Ukraine immediately turned into points of invincibility, providing humanitarian aid to the local population, internally displaced persons and the Armed Forces of Ukraine.
Dairy farms have become a part of the resistance, they continued to perform their tasks. They were forced to review their operational processes and optimize them in search of the most effective solutions.
A number of factors played in favor of farmers:
- the highly profitable year 2021, which made it possible to ensure the farm activities during the first six months of the war (organize a sowing campaign, pay wages to employees, purchase means of production, etc.)
- “investment” of surplus grain produced for export in milk and meat production during the 5-month complete blockade of the Black Sea ports
- consolidation of work with the processing industry, which, understanding the essence of dairy farming (the continuity of the milk production process), found opportunities to maintain the purchase price in parallel with solving its own problems (destroyed or stopped dairies, consumer migration, etc.)
- the decision made by the European Parliament regarding the abolition of import tariffs for agricultural products exported to EU countries.
The latter became a kind of salvation for the dairy industry at the moment of its greatest vulnerability, when due to forced migration and the economic crisis, the domestic consumption of dairy products significantly decreased and the warehouses of processing enterprises were filled with long-term storage dairy products.
The opening of the European border for the export of dairy products allowed processing enterprises to maintain and later increase the purchase price, which became decisive for the economy of dairy farms which reported profits in 2022. In 2022 the profitability of milk production was 17%. The volume of exports of milk and dairy products in terms of milk increased by 36.8%, imports decreased by 47%.
The speakers covered other issues, including:
- the impact made by russian occupiers on the world dairy farming – blocking exports of fodder (corn, soybeans, meal, etc.) – resulted in the the increase in the world prices and the need to look for other suppliers;
- the scale and features of demining fields (5 million hectares of agricultural land) can take from 30 to 70 years and require 1.5 billion dollars. USA;
- the consequences of blackouts for the dairy industry of Ukraine: the loss of milk and dairy products, an increase in the cost of production due to the need to use generators
- consequences for the world, first of all, the increase in the influx of refugees from Ukraine.
The presentation became one of the most discussed during the conference. It demonstrated an example of the unprecedented resilience of Ukrainian dairy farms during the war to the international community and called for further support for Ukraine. It showed that not only further development of the global dairy market, but also the fate of the world will depend on the victory of Ukraine.