Business

Ukrainian milk producers are facing a new price decline: reasons and forecasts for 2025

In the second half of March, purchase prices for milk in Ukraine continued to move downward due to an increase in exports of Ukrainian dairy products and an increase in domestic consumption. This was reported by the press service of the Association of Milk Producers (AMP), Komersant ukrainskyi reports

According to the Association of Milk Producers, outbreaks of foot-and-mouth disease in Europe and the likely abolition of the EU’s preferential duty-free regime in June 2025 create preconditions for further declines in purchase prices.

Current situation: milk prices are falling

As of March 25, 2025, the average purchase price of extra-quality milk amounted to 16.35 UAH/kg (excluding VAT), which is 45 kopecks lower than a month ago. The price range ranges from 15.70 to 16.70 UAH/kg: the lower limit fell by 80 kopecks, and the upper limit by 30 kopecks.

Premium milk costs an average of 16.15 UAH/kg (down 50 kopecks), with a range of 15.50 to 16.30 UAH/kg. The first grade is estimated at 15.65 UAH/kg (minus 35 kopecks), with prices ranging from 15.00 to 16.00 UAH/kg.

The weighted average price of the three grades amounted to 16.20 UAH/kg, which is 40 kopecks less than in February.

“Purchase prices in Ukraine continued to decline in the second half of March,” said Giorgi Kukhaleishvili, an analyst at the Association of Milk Producers.

“However, the surplus of raw milk on the market has slightly decreased due to the growth of dairy exports and the revival of domestic consumption. Consumers have adapted to the high prices, and dairy plants are stimulating demand with promotions and discounts in retail chains.

Why are prices going down?

Several factors are putting pressure on the Ukrainian dairy market:

• Foot-and-mouth disease outbreaks in Europe. Cases of foot-and-mouth disease have been reported in Hungary and Slovakia, and there is a risk of the disease spreading to Poland and Austria. These countries are major exporters of dairy products. In the event of a quarantine, they may switch to producing butter and milk powder, which are key Ukrainian exports. The accumulation of these products in Europe will reduce prices for them and, consequently, for raw milk in Ukraine.
• The risk of foot-and-mouth disease in Ukraine. If the disease reaches Ukraine, the dairy industry will suffer significant losses due to reduced production and exports.
• Cancellation of the EU duty-free regime. on June 5, 2025, the preferential regime for Ukrainian agricultural exports to the EU will expire. The reintroduction of duties will reduce dairy exports, in particular through the ports of Poland and Romania, leading to a surplus of milk in Ukraine and a further drop in prices.
• Competition on the global market. In terms of euros, prices for raw milk in Ukraine are higher than in New Zealand and South America, which actively sell milk to Asia and Africa, competing with Ukrainian producers.

Forecasts for the near future

Experts predict that starting from April 1, raw milk prices may drop by another 20-30 kopecks per kilogram.

“The surplus of milk on the market is decreasing, but external factors such as foot-and-mouth disease and the possible abolition of the duty-free regime will continue to put pressure on prices,” Kukhaleishvili warns.

The profitability of milk powder and butter production has improved, but cheese and casein remain unprofitable, which also affects purchase prices.

A factor behind the decline in raw milk prices in Ukraine may be the abolition of the EU’s preferential customs regime for Ukrainian agricultural products, including dairy products, on June 5, 2025. The reintroduction of duties is likely to reduce the volume of dairy exports from Ukraine, even to third countries, as they are shipped through the seaports of Poland and Romania. The surplus of raw milk in Ukraine is likely to increase and purchase prices to go down in the event of a similar scenario.