According to the results of the 1st half of 2012, farmers, for the first time in 6 years have overtaken the households in terms of milk supply for processing. According to the survey of the Association "Ukrainian Agribusiness Club" (UCAB) "Major livestock holdings in Ukraine: dynamics of development", such trends indicate major structural changes that will determine the status of the Ukrainian milk market.

The State Statistics Committee reports that in the first half of 2012 agricultural enterprises supplied 1146.2 thousand tons of milk for processing which is 15.6% bigger than in the same period last year. This allowed farmers for the first time in recent years to "overtake" households (992 thousand tons or 6.3% less than in the first half of 2011) in the volume of milk supply for processing.

Taras Gagalyuk, the director of UCAB agency «AgriSurvey», claims that such trends allow making some conclusions about the future of the dairy industry in Ukraine. "According to our research, significant investments in the construction of dairy facilities and modernization of dairy farms that have been made in the last 3-4 years is the main factor that caused 15% increase in milk production on farms, and consequently led to an increase in milk supply for processing from this group of producers, "- said the expert.

So, for the first time since the global financial crisis it was made possible to increase the total volume of milk supply for processing. T. Gagalyuk believes that in the short term the competitiveness of domestic dairy products on world markets may increase. After all, farms produce milk of high quality and the products of its processing could help to diversify export markets, including sales on EU markets.

On the other hand, a large share of purchases from agricultural enterprises explains why the price for dairy products for consumers is not reduced pro rata to the growth of production. "Compared to the first half of 2011 the procurement milk prices fell by 3% only, according to the State Statistics Committee. Naturally, one should not expect a serious decline in prices in retail trade ", - said T. Gagalyuk.

At the same time the tendency of replacement of household farms with agricultural enterprises demands new requirements to the organization of industry, considering the interests of households. "Without the participation in cooperatives it will be difficult for the households to compete in quality and quantity of raw materials with agricultural enterprises. To support the creation of cooperatives legislative changes are needed and we hope that soon this problem will be solved ", - T. Gagalyuk said.

Information note: "Major livestock holdings in Ukraine: dynamics of development" - is an annual survey of the Association "Ukrainian Agribusiness Club," devoted to the analysis of structural changes and corporate management in meat and dairy industry (date of publication - July 25, 2012). The study covers information on the top producers of milk, pork, cattle and poultry, the analysis of cost, marginality and profitability of livestock breeding with estimated break-even points, the technical efficiency and return of investment, the comparative analysis of expenses, as well as the analysis of macroeconomic issues, such the influence of Russia's WTO accession and VAT legislation on the development of meat and dairy industry in Ukraine and others.
 

Additional information by phone: +380 44 201-49-50

E-Mail: [email protected]

UCAB Press Office

Tetiana Kotyk

The Association "Ukrainian Agribusiness Club" (UCAB) www.agribusiness.kiev.ua was founded in 2007 to protect the economic and professional interests of players of agribusiness in Ukraine. UCAB is a unique platform in Ukraine for establishing business contacts between the leaders of agribusiness, improvement their work and dialogue with the government. UCAB actively supports Ukrainian producers in establishing and maintaining international business relations. The Association consists of the largest producers and processors of agricultural products in Ukraine.