Demand for dairy products in Ukraine increases 14% in 2023 amid record growth of raw milk prices - experts

MOSCOW. Jan 17 (Interfax) - Raw milk prices for makers of dairy products in Ukraine jumped 30% in the period from July to December 2023 and reached a ten-year high by the end of the year, Ukrainian media reported, citing a statement from the Ukrainian Union of Dairy Enterprises.

"The December level of raw milk prices in Ukraine in the euro equivalent and taking into account the average European basis if delivery - 41.40 euros/100 kg - is the highest in at least 10 years," the statement said.

The price rose above 40 euros only once in these years, in November 2021, when it reached 40.70 euros per 100 kg due to the significant revaluation of the hryvnia, the union said.

The record growth of prices for milk is having a negative impact on the affordability of domestic dairy products and their competitiveness, and is increasing costs for consumers, experts said.

However, Ukraine's Association of Milk Producers believes current prices are in line with the European average and the current balance of supply and demand.

"The current procurement price corresponds to the balance of raw milk demand and supply on the domestic market. Right now the supply of raw milk in Ukraine is at about the same level as the needs of milk processing plants," analyst Georgy Kukhaleishvili was reported as saying on the association's website.

However, Ukrainian processing plants need more milk to meet the growing demand for dairy products in the country.

Ukraine's milk and dairy product exports fell 25% in 2023 amid the recovery of domestic demand as Ukrainians returned from abroad. Consumption of dairy products in the country rose 14% last year and the association expects the figure to double in 2024.

"Ukraine continues to have fairly strong prospects for increasing milk production, as there is demand from both the export and domestic markets. One should also not forget that the average Ukrainian currently consumes only 190 kg of dairy products in the milk equivalent, while the health standard for a properly functioning body is 380 kg," the association said.