Power shortages threaten dairy industry – association
Prices for raw milk in Ukraine have fallen across all grades due to a surplus of dairy products, a decline in exports, despite rising production costs on dairy farms, and the energy crisis, which is disrupting the operations of farms and dairy processing plants, the Association of Milk Producers (AMP) has reported.
The industry association noted that the average purchase price of extra-grade milk as of January 20 was UAH 14.50/kg (excluding VAT), which is 80 kopecks less than the previous month; premium grade milk was UAH 14.30/kg (excluding VAT, -90 kopecks); and first grade milk was UAH 13.90/kg (excluding VAT, -90 kopecks). The weighted average price of the three grades was UAH 14.35/kg (excluding VAT, -85 kopecks).
APM analyst Heorhiy Kukhiashvili emphasized that the second half of January saw another decline in raw milk prices across all grades. Milk purchased from households is also becoming cheaper. Compared to January 2025, the average price of milk has decreased by 20%.
According to him, the emergence of an oversupply of dairy products on the global market in the second half of 2025 led to a collapse in export prices for exchange-traded goods, including butter and milk powder, which, in turn, affected the reduction in exports and lower prices for raw milk.
"Ukrainian dairy processing plants have been increasing production of butter, condensed milk, and powdered milk, which are difficult to sell. Milk and butter production remains low-margin. This situation poses a serious challenge for the dairy industry, as current purchasing prices do not keep pace with rising production costs at dairy farms," the expert noted.
The APM emphasized that the electricity shortage caused by Russia's systematic shelling of Ukrainian energy infrastructure facilities poses a serious challenge to the dairy industry.
"Due to hours-long blackouts, there have been disruptions in the shipment of raw milk from dairy farms to dairy processing plants. Plants report that they are unable to accept milk and process it while the power is out. If the power supply situation does not improve soon, milk producers must develop crisis management measures in case processors are unable to accept milk for one to two days," the industry association noted.
The APM recommended that the dairy farm revise its investment plans for 2026, as a rapid increase in raw milk production is not feasible amid the energy crisis, and a significant recovery in demand for dairy products on the domestic market is unlikely in the short term.
"In Ukraine, the cost of raw milk production is rising due to additional costs for diesel generators and independent power generation. Severe frosts have led to reduced cow productivity, a drop in milk yield, and logistical disruptions," the association stated.
The APM called on the authorities to abolish the excise tax on diesel fuel for generators used by agricultural producers and to facilitate the implementation of alternative energy projects (solar power plants or biogas plants).
Furthermore, according to the APM, government support for Law No. 6068-d on combating unfair trade practices by chains and the implementation of protective measures against the significantly increasing import of dairy products could improve domestic sales of domestically produced dairy products. The association proposes purchasing food for humanitarian aid packages and other government purposes exclusively from domestic producers.
