Ukrainian cheese producers may lose their domestic market due to growth of cheaper imports

Ukrainian cheese producers are facing the threat of losing a significant part of their domestic sales market due to the very likely growth of imports, the industry analytical agency Infagro reported.

"The main reason for the growth of cheese imports is the disparity in prices for Ukrainian and European products. Imported cheese is significantly cheaper than domestic one," the analysts explained.

In their opinion, two factors can save the situation: a reduction in prices by Ukrainian cheese makers or a significant devaluation of the hryvnia.

The first option is unlikely, producers have already gotten out of the habit of using such a sales promotion tool. Even traditional cheeses will not be sold cheaper than UAH 300/kg in the near future. But the collapse of the hryvnia exchange rate may very well happen, given the war and the current state of the economy, experts believe.

"This is an assumption for the future, but now we are seeing a December increase in imports of rennet cheeses (hard, semi-hard, white) by 50% compared to December 2023, to 4,600 tonnes. Supplies of European processed cheeses in a similar comparison increased by 28% to more than 500 tonnes," the analysts stated and added that if the trend of high imports continues, this means that European cheeses will account for half of all cheese sales in Ukraine.

According to the industry agency, the overall results of the cheese sector in 2024 were acceptable. Imports of rennet cheeses increased last year by only 11% to 29,000 tonnes, which is almost a third less than in the pre-war 2021. Purchases of processed cheeses in 2024 compared to the previous year increased by 14%, to 4,600 tonnes, which is a quarter less than in 2021.

At the same time, Ukrainian producers in 2024 were still able to increase the export of semi-hard cheeses by 9% to almost 7,000 tonnes. At the same time, processed cheeses (along with the curd product) were sold abroad by 4% less, 4,200 tonnes.

"In general, domestic cheesemakers have something to think about. Something needs to be done to prevent imports from becoming as significant as they were in 2021. But back then, it was still possible to balance the situation by having a large number of consumers, but now a significant portion of them are abroad, and many under occupation. Producers can, of course, hope for foreign trade, but it will be very difficult to increase cheese exports. Logistics to post-Soviet countries remains quite complex and expensive. In other markets, it will simply be impossible to compete on price with European goods," Infagro summed up.