Main points
- The reduction in the number of cows in private farms stimulates the development of industrial dairy production in Ukraine.
- Manufacturers are facing rising costs and may raise prices for certain product categories, while competition for market share remains high.
The dairy market is growing / Photo Pixabay
The decline in the number of cows in the private sector is changing the balance in the Ukrainian dairy market. Producers are increasing production, but are facing rising costs and fierce competition.
The market is shifting towards industrial production
The decrease in the number of cows on household farms is stimulating the development of the segment of industrially produced fresh dairy products, reports INFAGRO. This opens up opportunities for processing enterprises to gradually increase production volumes and strengthen their positions in the market.
At the same time, the expansion is taking place in difficult conditions. The main demand is concentrated in the segment of products with low margins, which forces manufacturers to work with minimal profits. Competition between companies remains high, as each player seeks to gain a foothold on the shelves of retail chains.
Costs are rising, prices could go up
Traditional tools for the fight for consumers – promotions and discounts – are gradually losing their effectiveness. Despite relatively affordable raw materials, manufacturers are faced with rising costs for packaging, energy, and logistics, which puts pressure on the cost of production.
In such conditions, some companies are already considering raising base prices. Most likely, the price increase will affect certain categories of goods, while products with a high fat content – in particular sour cream, cream and full-fat cheeses – will temporarily remain more stable in price. This is explained by the need to sell surplus milk fat.
Overall, the industry is demonstrating a trend toward increased use of raw materials for the production of fresh produce and a gradual increase in output compared to last year.
Average prices for milk in supermarkets, according to the Ministry of Finance:
- Galicia (950 – 1000 grams): from 53 to 62 hryvnias.
- Selyanske (900 – 950 grams): from 47 to 73 hryvnias (ultra-pasteurized is more expensive).
- Farm (900 grams): 50 – 70 hryvnias.
- Private labels of chains: from 36 – 42 hryvnias.
The grocery basket is changing: what will happen to food prices in May?
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In May, further increases in prices for dairy products and cereals, in particular buckwheat and millet, are expected.
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Prices for vegetables from the borscht set increased, while prices for meat fluctuated depending on the type.
For households, prices for second-grade milk are expected to decrease by approximately 2% in May compared to April, to 9.61 hryvnia per kilogram . Among the reasons are lower product quality, significant logistics costs, and increased supply from private farms.