For 9 months of 2020 Ukraine has exported milk and dairy products to the amount of USD 128.6 million and imported to the amount of USD 218.2 million. In other words, in 2020 Ukraine became a net importer of milk and dairy products.
Since 2015 export of milk and dairy products constituted USD 177.7 million, though in 2017 this index rose to a record USD 282 million. And starting from 2018, export reduced to USD 265 and USD 223.5 million respectively in 2018 and 2019.
Taking into consideration current indicators of dairy exports, we should expect another decline in this indicator in 2020 to the level of USD 160-165 million. Ivan Kolodiazhnyi, the UCAB Analyst, explains why this is happening:
Firstly, the number of cow population in Ukraine has been declining in recent years. From 2015 up to and including 2020, the number of cows decreased by 20%. In 2015 (as of 1 January) there were 2.2 million cows, in 2020 (as of January 1) there were slightly less than 1.8 million cows.
Secondly, efficiency of milk production in Ukraine is low, although there has been a recent upward trend in efficiency. If we compare 2019 and 2020, efficiency of the milk yield has increased from 1.5% to 5% (depending on the form of ownership: enterprise or household) but it is still not enough to offset the annual reduction in livestock leading to the shrinked milk production. Starting from June 2020 milk prices are constantly rising and in the nearest future the upward trend in prices is not going to change.
Thirdly, the liberal import regime, in particular low import duties, leads to competition with import. Strengthening of hryvnia to 24 UAH / USD has continuously contributed to it as well.
Fourthly, there has been a poor harvest including livestock feed, especially in the south. Since it is unprofitable to keep cattle on the purchased feedstuff many farms are forced to reduce their livestock.