Production of high-quality milk in Ukraine has grown 54-fold since 2008. Despite the challenging economic situation and a war in the country, dairy farmers are ready to invest more and expand production but first they would like ascertain the domestic demand for high-quality milk.

When Russia Federation banned imports of Ukrainian cheese, local processors had to urgently search for alternative markets. After all, the dairy industry of Ukraine, which provides the national economy with around USD 650 million in export earnings, was almost fully dependent on the Russian market.

In response to this problem, a Dairy Sector Working Group has developed amendments to Ukrainian legislation, allowing for exports of high-quality dairy products to the European Union. In turn, this should facilitate greater access to worldwide markets.

The working group was created with the support of FAO and the European Bank of Reconstruction and Development (EBRD) to promote dialogue between Ukraine’s Ministry of Agrarian Policy and Food and the leading associations of milk producers and processors.

"To diversify exports by gaining international recognition, Ukraine should establish the production of high-quality dairy products – which can only be achieved by utilizing high-quality milk," said Andriy Yarmak, economist with FAO’s Investment Center. 

“According to our preliminary estimates, over the next five years, Ukraine would need an additional 1.2 million tons of high quality-milk per year – equivalent to the production of approximately 150 modern dairy farms with one thousand cows each – to satisfy the market demand of the EU, the Middle East and Asia,” Yarmak added. “Moreover, we should move away from assessing the success of the dairy industry by the size of the national herd. In the United States, for example, for several years the number of cows has decreased while overall milk production has increased."

According to estimates of the Association of Milk Producers of Ukraine, the Ukrainian milk and dairy market in 2013 reached 25.9 billion Ukrainian hryvnia – or close to US$ 2 billion – but mostly comprising low-cost products of limited quality. Association experts believe improvement in the quality of dairy products will have a positive impact on consumption and the development of market opportunities.

Many Ukrainian consumers already prefer to pay more for fresh milk from farmers’ markets, perceiving it as better quality than packaged and safe milk from supermarkets.

“The Ukrainian Ministry of Agrarian Policy and Food believes that the new food safety laws adopted recently in Ukraine as part of the country’s commitment to the process of European integration will help diversify exports,” said Andriy Dykun, Deputy Minister of Agrarian Policy and Food.

“The commitment of leading milk processing enterprises to investing in innovative technologies, the development of new products and new market discovery is already visible,” he added. “These recent efforts from both the public and private sectors will lead to new jobs in rural areas, an improved trade balance, and, most importantly, will provide Ukrainians with safer and higher-quality dairy products.”

30 October 2014, Kiev, Ukraine