Market Matters Blog

The Russian invasion in Ukraine has taken a toll on all aspects of agriculture there, including the dairy industry. Ukraine dairy farmers are trying to keep their businesses afloat, but it is becoming nearly impossible to move milk because of the destruction of infrastructure in parts of Ukraine. Some dairy farms have been destroyed, while others struggle to keep farming.

Anne Harnish, food and family editor for Lancaster Farming, interviewed Ukrainian dairy farmer Nataliya Koval on March 12. Her story, "Ukraine Dairy Farm Struggles Under Invasion While Providing Food to Its Community," was first posted March 16, then updated March 24 (https://www.lancasterfarming.com/…).

Harnish's story showed the Kovals' determination, as well as the challenges their dairy has faced during this difficult time.

The following story is reprinted in its entirety with permission from Harnish and Lancaster Farming.

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Even under extremely dire circumstances, this eastern Ukraine dairy farm has found a purpose in feeding people.

With a worried, but steady voice, Ukrainian dairy farmer Nataliya Koval recently talked about her determination to continue farming despite the Russian invasion of Ukraine that began on Feb. 24, just three weeks ago.

Koval spoke this week via cellphone from within the confines of a tiny, windowless room in a house near the city of Kharkiv, where she currently is sheltering from the bombing with her father and two sons. She explained how in just weeks, the dairy farm that she and her husband, Andriy, own, suddenly had to face utmost adversity and change its operation. The couple has decided to give away their cows' milk for free to anyone who needs it. And, they switched their on-farm facilities over to baking bread to feed local Ukrainians running out of food due to the onslaught of war.

The Kovals' farm is about 40 miles away from their place in Kharkiv, so they live at the farm most of the time. Typically, on Wednesdays and Sundays, Nataliya would leave the farm and drive to Kharkiv to visit her college-age sons and to get farm supplies.

Kharkiv is the second largest city in Ukraine, located in the east, not far from the Russian border.

"(On Thursday, Feb. 24) we were awakened by the sound of explosions at 5:30 a.m. My husband was at the farm, I was in Kharkiv. I haven't seen my husband since Feb. 22 and he can't come back," she said. "I hope he is safe."

The couple talks often, but the farm is no longer reachable by phone unless Andriy goes to one place in the local village where he can call Nataliya each day. They decided it was best for Nataliya to stay in Kharkiv and handle things from there.

GROWING THE BUSINESS

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, and an online store that began at the end of 2021, www.panijupiter.com.

"It's all craft and has a very small scale," Nataliya said about the farm's artisan dairy products.

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

Unfortunately, the two processing plants they deliver milk to also had closed due to the war, so more milk was dumped. Prior to the Russian invasion, the Kovals were milking cows three times a day. They sold about 7 tons of milk to a Danone milk processing plant and some to a children's dairy kitchen in the city. The rest of the milk was used to feed their calves and to process into artisan dairy products on the farm. The farm has about 40 employees who help with everything from milking, cow health, feeding, field work, cheesemaking and baking.

Now, they have adjusted down to milking cows just two times a day, she said, and are producing about 4 tons of milk daily. The farm has enough hay and silage on hand to feed the cows for the year, but the couple is worried about other supplies and what to do for the planting season coming soon.

Nataliya said it was back in 2013 when she and Andriy decided to start a new dairy farm business with the goal of selling high-quality dairy products. At the time, they had two young sons, no experience in agriculture or animal husbandry, but had sufficient experience in business management and felt they could succeed in a niche market. They even started their own dairy trademark, Pani Jupiter.

There are many opportunities to farm in Ukraine. Ukraine is the second largest European country, after Russia, and had about 44 million residents before the war. The independent nation is known for its rich agricultural soil. With 70% of Ukraine's land in agriculture and its grain exports accounting for 12-15% of the world's supply, the nation is considered the "breadbasket of Europe."

But it wasn't always easy for the Kovals.

"Our small and young business barely survived in 2014-2015, but we had no other choice but to move forward," she said.

But the farm grew and was successful, giving tours and workshops of the farm and cheese facilities to groups of visitors and schoolchildren. Many visitors had lots of questions about cows and how milk and cheese are produced, so the Kovals developed an educational component and added workshops at the farm.

Besides the milking herd, the farm also has about 350 calves, heifers and bulls. For feed, the Kovals buy in grains like barley and corn from other farmers, but also sow their own crops, including about 250 acres (100 hectares) in perennial grasses and about 600 acres (250 hectares) of corn for silage, as well as growing roughage on 850 acres (350 hectares), some of which is rented land.

RUNNING A DAIRY DURING A WAR

But since the invasion, Nataliya can't get back to the farm because the city is under attack and the bridge is out. She does as much as she can from her location. While Andriy and the employees manage the farm, Nataliya is busy locating farm supplies and trying to find transportation to deliver salt and minerals for the cows to the farm, because they are running low. Drivers would have to travel far out of the way to avoid the broken bridge and roads are dangerous, she said, due to "a lot of weapons, a lot of unexploded shells, a lot of broken military equipment."

Earlier this week, Nataliya managed to find a ton of salt and 20 bags of chalk (minerals) in a warehouse in Kharkiv, but has the problem of getting it to the farm.

"Previously, all deliveries went through Kharkiv," she said. "After numerous attacks, including aircraft, the city was badly damaged. Two-thirds of the residents left. All suppliers left. For example, a salt supplier moved (away) to Dnipro, and we need to pick up salt from the city on our own."

The farm also needs to restock hard-to-locate supplies like diesel, which is used to run the cows' feeding system, remove manure and fuel the tractors. She said Russia has cut off all opportunities for Ukrainian farms to import fertilizer, seed and diesel.

The Kovals have a reserve of diesel, but if they run out, she said, "it's scary to imagine how we are going to feed the animals."

In Kharkiv, she and her sons and her father spend nights sheltering in the basement, because the nightly air attacks are heavy.

"We hope that this will somehow save us when a shell hits. Shops are open two to three hours a day," she said.

"The bridge that connected us with Kharkiv, and with the rest of Ukraine, was destroyed. There is not even a pedestrian crossing. The village (where the farm is) is in the rear of the Russians, so no one can bring anything," she said. "The first problem that arose was the lack of bread. The village has stocks of potatoes, there are chickens and eggs, but bread was brought across the bridge."

As the situation got worse, Nataliya and Andriy decided to allow local villagers to come to their farm shop and take as much milk as they need for free. They decided they would rather help to feed people than dump the milk.

Their employees' lives changed too.

The farm stopped making cheese because Kovals' cheesemaker became trapped in Kharkiv. Even though they can no longer pay full salaries, most of their farm employees have stayed on, working at the farm. There is a basement at the farm, which Andriy and others equipped as a shelter, with mattresses and plenty of water.

"Rockets and jets were flying over the village. It was scary, and it was not clear where the explosions would be," Nataliya said. "Our employees, their families and neighbors spent the first week at our shelter. Then they got used to it ... now they spend nights at home. Although the jets still fly (overhead and are) very noisy."

FEEDING A COMMUNITY IN NEED

The farm had received a USAID AGRO grant in 2021 to expand its cheesemaking and bakery operation. The Kovals had prepared the building, made repairs and received equipment.

"In December, we started to test the equipment, developed recipes and documentation," she said. "On Feb. 26, 2022, a master class for children on how to make a biscuit cake was scheduled. On Mar. 12, a master class for beginner cheese makers was scheduled."

Due to the war, those workshops were canceled, but the preparations gave Koval's farm an opportunity to help. Despite not having a lot of practice on the new equipment, the farm's employees have learned to produce bread.

"We had a small stock of flour and yeast," Nataliya said, "but it ran out literally on the second day of the war. Fortunately, there are still farmers in the village that grow grain. They had wheat in the warehouse, which they planned to plant in the spring if the winter crops suffered. This wheat is now milled in the village into flour at the old mill that has not worked for many years. Then, we bake bread out of it. We also had to start growing yeast, because we were also running out of it, and there was nowhere to buy. In the village we can't buy flour or any products. Nothing."

This past week, she said more local residents from other villages are coming to their farm to get bread. The farm's employees are baking 250 loaves a day to sell or give away to those who don't have money.

"For milk, they bring any container they can get, to get milk -- jars, plastic, buckets. They take milk for free," Nataliya said. "They are buying with money the cheese and yogurt. The others can make their own cheese from the milk."

AN UNCERTAIN FUTURE

The Kovals want to plant corn in May, which gives them a little time, but planning for the future is nearly impossible, she said. 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.

"Right now, we don't plan for long: in the morning, depending on the shelling, we make decisions on what to do. There is no internet on the farm, there is no stable cell connection, the electricity service is unstable.

"Most of the people we know have left (Kharkiv)," Nataliya said, estimating that about two-thirds of the city's population has left in three weeks, traveling away from the shelling and fighting to other parts of Ukraine or leaving the country altogether, going to neighboring countries as war refugees.

"It is impossible to leave since we are farmers," Nataliya said. "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."

Kovals know of a neighboring 1,000-cow dairy on a main road a few miles away that was hit by recent shelling when a battle broke out on the road. The farmers lost six of their 11 farm buildings, resulting in many dead or escaped animals.

Despite the constant fear and unpredictability of the situation, it is clear she and Andriy are determined to keep their farm going. But it's not easy.

"We are staying in a small room without windows. From the start of the war, we don't go away. Outside -- it's dangerous," she said. "Yesterday, some fighting damaged the pipeline that provides gas to our house in Kharkiv."

It is snowing, and temperatures in Ukraine are near freezing, so there is a lack of heat in the bitter cold. She is trying to cook, but it is difficult.

"Today I made focaccia (flat bread) since it doesn't have to rise. It's not very good," she admitted. "We're eating it with (spiced) pork fat -- a common Ukrainian national dish."

According to the Associated Press and other news organizations, 3 million Ukrainians already have fled their country, while the rest remain. Thousands of Russian soldiers, Ukrainian soldiers and civilians have been killed in three weeks of war since the invasion of Ukraine began in late February. However, there now are so many dead that officials say the numbers have become hard to count and are probably much higher.

"We were not expecting this war and we did not plan for it," Koval said. "We don't understand why Russia needs to bomb our villages."

"We hope Ukraine will win. 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."

Her two college-age sons were attending university in Kharkiv, but the universities closed when the invasion started. The Kharkiv National University building, where their son attends, has since been bombed.

"Farmers should always work and find a way to solve any problems. ... We can't change anything about the war," she said, but she and her husband are doing what they can to feed local residents.

"I hope that the farm will be farmed for my children and for their wives," Nataliya said. "For now, I don't know. And we stay here."

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Harnish's story of the Kovals gives a glimpse of what dairy farmers are facing in Ukraine and some of the obstacles the war has presented.

USDA REPORT ON UKRAINE DAIRY AND PRODUCTS

According to the USDA Foreign Agriculture Service (FAS) Ukraine Dairy and Products Annual report, as of 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 accompany 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/…

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

Follow her on Twitter @MaryCKenn

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