Market Matters Blog

The Russian invasion in Ukraine has taken a toll on all aspects of agriculture there, including the dairy industry. In the regions where Russia has heavily invaded, some dairy farms have been destroyed, while others struggle to keep their operation going.

Ukrainian dairy farmer Nataliya Koval talked to eDairy News on March 21 about her determination to continue farming despite Russia invading Ukraine on Feb. 24.

According to eDairy News, "At the beginning of 2022, the Kovals were successfully running a 300-head Holstein dairy farm along with a mixed fodder production workshop, a cheese and dairy products facility, a school workshop for baking and cheese products, a farm store, a store in Kharkiv." They also had online store they began late last year. The Kovals were milking their cows three times a day.

Things changed quickly.

"On Feb. 24, the milk truck did not take milk from us, because the bridge to get to the farm had been destroyed," Koval said. "We had to throw the milk out, because the containers with chilled milk were already full, and the cows had to be milked."

The war also closed the two processing plants where the Kovals delivered their milk. Their milk had to be dumped instead.

Their farm normally has about 40 employees who helped with fieldwork, as well as milking, cow health, feeding, cheesemaking and baking. Weeks after the war started, the dairy farm owned by Nataliya and her husband, Andriy, suddenly had to face utmost adversity and change its operation, she told eDairy News.

Now, they milk their cows twice a day for about 4 tons of milk daily. They give away their cows' milk for free to anyone who needs it. Their on-farm facilities have been switched to baking bread to feed local Ukrainians running out of food because of the war.

Koval said their farm has enough hay and silage to feed the cows for the year, but they're worried about other supplies and what to do for the planting season coming soon, noted eDairy News.

The farm also needs to restock hard-to-find supplies like diesel, which is used to run the cows' feeding system, remove manure and fuel the tractors, she said.

Russia cut off all opportunities for Ukrainian farms to import fertilizer, seed and diesel, Koval explained, adding the Kovals have a reserve of diesel, but "it's scary to imagine how we are going to feed the animals" if they run out of fuel.

"The Kovals want to plant corn in May, which gives them a little time, but planning for the future is nearly impossible ... Their contracts for the delivery of seeds were signed in February, but the Kovals didn't have time to pay for and receive the seeds. They've realized that it is impossible to sow grass now, but they need to plant corn or there won't be food for the cows for next year," reported eDairy News.

"Most of the people we know have left Kharkiv," Koval said. "It is impossible to leave since we are farmers. If I leave, I lose all my life. My husband and I can't start another business. We put all our money, our credit, in this business. Ten years of my life is in the farm."

The Kovals said they know a neighboring 1,000-cow dairy a few miles away that was hit by recent shelling when a battle broke out on the main road near that dairy. They had dead or escaped animals after six of that farm's 11 farm buildings were lost.

"We hope Ukraine will win," said Koval. "For now, we just manage to stand. I don't want to become a refugee myself. We don't understand what is happening in Kharkiv, but we are here now. We don't have a plan of getting away from the city. We don't know right now where is safe."

According to the USDA Foreign Agriculture Service (FAS) Ukraine Dairy and Products Annual on October 2021, three quarters of Ukrainian milk is still produced in private households. Labor-intensive household milk production is becoming less attractive, despite high milk procurement prices and nonmonetary incentives from the large dairy processors, noted USDA. The number of cows in the household sector is steadily decreasing and this trend is not expected to change in future.

The number of cows in both the industrial and household sectors contracted in 2020 continued decreasing in 2021 due to low efficiency of both enterprises. Although industrial farms are responsible for only 25% of all Ukrainian cows, they remain responsible for almost 35% of raw milk production, noted the USDA report.

They also produce milk of higher quality suitable for cheese and the production of whole dairy products and Ukraine has a valuable and strong cheese manufacturing sector. Industrial production can be split into two categories: large, specialized dairy farms and non-specialized small and mid-size farms. The non-specialized companies maintain their dairy enterprises as "legacy" businesses or as social rural employment projects that accompanies their profitable crop production businesses. The number of specialized dairy farms is growing. These farms are profitable and have expanded their cow population.

Shrinking raw milk supplies and increased milk prices resulted in almost a 20% surge in pasteurized milk prices, noted the annual report. Almost all fluid milk imports are milk for retail trade in packaging of different sizes. High world market prices did not allow for fluid milk import increases, but 2021 imports are expected to remain close to the all-time high level reached in 2020, noted the USDA annual report. More than two-thirds of Ukraine's fluid milk exports are pasteurized milk in retail packaging, with neighboring Moldova and Georgia being the key export destinations.

Now, given the destruction of infrastructure caused by the war, the entire landscape and future of the Ukrainian dairy industry is in question.

Here is a link to the entire USDA Ukraine: Dairy and Products Annual: https://www.fas.usda.gov/…

Here is a link to more information about the Kovals and their dairy farm: https://edairynews.com/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow her on Twitter @MaryCKenn

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