In the pre-war 2021, many analysts claimed that Ukraine had already become a net importer of dairy products, significantly reducing exports and increasing imports. It was even stated that dairy imports were of 1 million tons of raw milk equivalent. At the same time, Infagro analysts were not so pessimistic at the time (exports were still slightly positive then), although they predicted the loss of the status of a net exporter in 2022.

Indeed, until last year, a steady increase in consumption of dairy products was evident in Ukraine, but dairy production was reducing against the background of a steady decrease in raw milk supply. This led to reduction in export volumes and the increase in import purchases.

The stimulus for the growth of imports was also a significantly higher cost of domestic production of dairy products compared to indicators in the main supplier countries in the EU. This is not surprising, because for a certain period of time in some European countries raw milk was cheaper than in Ukraine.

As a result, according to Infagro’s estimates, last year exports of dairy products in raw milk equivalent decreased to 0.6 million tons, while imports have grown and reached almost the same level. At the same time, in monetary terms, in 2021 dairy imports exceeded exports, 396 million USD against 364 million USD respectively.

In February, russia attacked Ukraine and all previous forecasts of milk balances for 2022 became impossible. With the beginning of this aggression, Ukrainian dairy industry, like the entire economy of the country, experienced a real shock. Many factories suspended their activities, farms became unable to sell milk and logistics chains were broken. But over time, due to our heroic Armed Forces and the hard work of all the people in dairy industry, it was possible to somewhat stabilize the situation.

However, the crisis has not been completely overcome. According to preliminary estimates by Infagro, this year milk production in Ukraine will decrease by 11-12%. If it were not because of the war, such a collapse would be considered extremely critical and would definitely cause a significant increase in imports. But in conditions of demographic and migration crisis, consumption of dairy products in the country has significantly dropped. It is possible that annual results will show the decrease by 20%.

So, surprisingly, a lot of “excessive” milk appeared in Ukraine, and it became nesessary to export it. Otherwise, dairies would be forced to reduce processing even more, which would definitely cause the mass slaughter of livestock in Ukraine.

Despite the favorable situation in the world markets, managing exports turned out to be a big problem. After all, before the war, the lion’s share of dairy exports was sold to countries of Asia and Africa through Ukrainian seaports, which Russia blocked. Or it was exported to the post-Soviet countries of Central Asia or the Caucasus via transit through the russian federation, which, of course, became impossible.

Deliveries to the EU or a third country via transit through Europe are not the only way of export. In the first months of the war, both the first and the second options were extremely problematic. It is not easy to export even now, but it became possible to develop certain new logistic ways. Well, and most importantly, the EU removed the restrictions for Ukrainian goods for a year term and now there are no quotas or tariffs. Europe has also significantly simplified conditions of transit through its territory.

As a result, despite the significant reduction in milk production, exports of dairy products in the current year may be even greater than last year. We assume that about 630,000 tons of dairy products equivalent to raw milk, or 20% of the entire volume of raw milk processed, will be exported from Ukraine.

The friendly countries of the EU saved (and this is not exagerration) Ukrainian dairy industry from an even greater mass loss of the cow population and we are very much grateful to them for this.