It seems that the crisis in the Ukrainian dairy industry is fading. The world milk prices show a clear upward trend – INFAGRO.
This trend is also making impact on the activities of Ukrainian dairy traders. The external demand and prices for their products have strengthened and even affected the domestic purchase prices for milk – they became somewhat stronger. However, this situation does not affect the domestic sales activity. Unfortunately, Ukrainians do not become richer the same quickly as the world global dairy market shows positive changes. Generally, the situation seems to be positive only for exporters and farmers.
Dairy exports prices are rising, but that’s not yet clear whether this growth is essential and how soon the prices may reach the pre-crisis 2013 level.
The forecasts made by OESD and FAO are somewhat pessimistic. Experts believe that the era of high food prices has expired. They declare that the reasons for this are the decline in growth of the world population and stunted economic growth in developing countries. However, analysts admit that the price of meat and milk products may rise considerably. For Ukrainian dairy exporters a good news is also the resumption of VAT refunding. Seems that recently some dairies were very surprised when they had got all arrears of VAT received. Though not all were so lucky …
The concerns that Ukrainian exporters had regarding possible restrictions Russia could have imposed on the transit of goods throught its territory to Kazakhstan came true. Putin issued a decree which completely prohibits the transit of the “sanctioned” Ukrainian products (including dairy) through Russia to Kazakhstan and Kyrgyzstan. Some exporters dared take a risk and found themselves in trouble – their cargo has stuck at the Ukrainian-Russian and Belarusian-Russian borders.
Whatever the doubts were about the use of the so-called Silk Route, but now Ukrainian exporters deliver their products to Kazakhstan just by this route. This means that logistics time is two or even three times longer, and shipping of a tonne of dairy is about $ 200 more expensive. But what can they do? Anyway, dairy exports to Kazakhstan is more profitable than that to “far abroad” countries, and if we talk about cheese trade, almost no alternatives exist.