The crisis started in 2014 rendered and continues to render a negative impact on our livestock industry.
The main negative factors are: an increase in prices and tariffs, leading to higher prices for keeping farm animals; decrease in purchasing power of Ukrainians; decrease in exports due to the closure of the traditional Russian market. As a result, there is a steady downward trend in the number of all animal species.
Crisis affected and dairy animal. Domestic Ukrainian consumption of milk fell due to a decrease in the population and a decrease in its income, and exports declined with the closure of the Russian direction. The increased cost of keeping cows, the low productivity of farms with outdated infrastructure, and the unavailability of credit resources have led to the fact that it is sometimes more profitable for farmers to use cows for meat than to use them for their intended purpose.
The current tendency in the livestock industry of Ukraine is the same trend, as the one that operates in a similar branch of the European Union, even though the reasons for their existence are different. In both cases the herds of farm animals are shrinking. In Ukraine, this is caused by a decrease in the profitability of production due to, on the one hand, an increase in the cost of their maintenance, and on the other, problems with sales at an effective price due to the low purchasing power of the population and export restrictions.
According to the Association of milk produces, over the past year, dairy products on store shelves have risen in price by 5-15%. Drinking milk with a fat content of more than 1% since the beginning of the year has increased in price by 7.2%, and milk with a fat content of 3.2% in November cost an average of 30 UAH (+ 10%). The price per kilogram of yogurt in December amounted to 60.46 UAH (+ 15.2%), the butter went up by 12.9% – up to 233.2 UAH/kg, and Russian cheese by 12% (up to 204 UAH / kg). The purchase price for an “extra” variety of milk began to rise in the second half of August 2018. Then the milk of this group went up by 20 pennies. – up to 9.29 UAH/l (including VAT).
We cannot fail to mention the bureaucratic difficulties of this industry. “The Law “On Milk and Dairy Products” contains many collisions, and 88% of its norms create additional barriers for the development of the market and business,” said Andrei Zablotsky, head of the “Agriculture” sector. He noted that BRDO experts conducted a systematic analysis of the regulatory field, which found that, in general, activity in the Ukrainian milk market is regulated by 57 legislative and regulatory acts, and this is a lot compared with other markets. At the same time, 16 out of 57 regulatory acts in the milk production market are irrelevant, another 5 have signs of illegal. Most of the 17 regulatory instruments have high corruption risks due to the uncertainty and non-transparency of the procedures.
As for us, even despite such a significant advantage as the opportunity to feed the herd with waste from our own oilseed industry, this type of business has lost its relevance. We produced the highest quality milk, with the price, respectively, higher than the market. And our final customer was not numerous. Constantly rising costs for the care and treatment of animals, the logistics of finished products, and paying salary of all workers, although did not lead to losses, but became an obstacle to profit. Of course, additional investments could turn the tide in our favor, however, we are now absorbed in participating in another large-scale and perspective project for the construction of a thermal power plant. As a result, it was decided to sell the entire composition of the dairy herd. This does not mean that, given the vast experience gained, we will not return to this activity. But in the current market conditions, we will direct our efforts and finances in the development of other projects that are less dependent on various factors.
With an increase in both the purchasing power of the population and in the export flow, these restrictions will be eased and our country’s animal husbandry will receive more market living space. Perhaps then we will be interested again.
With kind regards, team of GC “Agroliga”.