Ukraine, despite low prices on the global market, increased exports of most dairy products in May, both compared to April this year and compared to May 2023, Infagro, an industry information and analytical agency, reported.
According to experts, the reason for this is a significant increase in processing volumes against the backdrop of much weaker domestic sales growth than last year. Among the main commodity items, Ukraine exports the least amount of butter and cheese products. Exports of spreads, casein, and whey powder increased significantly compared to May last year.
At the same time, imports of dairy products (butter, rennet cheese, processed cheese) declined in May. Contrary to expectations, imports of cheese stopped growing. This is due to the upward trend in prices for milk and dairy products in Europe and, in particular, in Poland, the main supplier of this product to Ukraine, analysts explained.
“In June, exports of dairy products will increase further, while imports are likely to decline,” Infagro predicts.
As reported, in January-March 2024, Ukraine increased exports of dairy products by more than 40%. At the same time, imports decreased, but analysts urge domestic producers to pursue a reasonable pricing policy in order not to lose their positions in the domestic market.
Astarta, Ukraine’s largest sugar producer, intends to start selling sugar and dairy products under its own brand in stores without intermediaries in 2024, the company’s founder and CEO Viktor Ivanchyk told Forbes in an interview.
According to him, the agricultural holding plans to sell thousands of tons of sugar this year, and tens of thousands of tons in the following years. Astarta’s dairy products can already be bought in supermarkets under the brands of its established partners Lustdorf, Danone, Yagotynske, Molokiya, Kaniv, and Galychyna.
In addition, in 2021-2023, Astarta quadrupled its investments to almost UAH 1.7 billion. In 2024, the agricultural holding will invest in the production of soy protein concentrate, warehouse logistics, and electricity generation from biogas.
“Investments in Ukraine are the most profitable right now,” Ivanchyk says.
“Astarta is a vertically integrated agro-industrial holding company operating in eight regions of Ukraine. It comprises six sugar factories, agricultural enterprises with a land bank of 220,000 hectares and dairy farms with 22,000 cattle, an oil extraction plant in Globyno (Poltava region), seven elevators and a biogas complex.
In 2023, the agricultural holding reduced its net profit by 5.0% to EUR 61.9 million, and its EBITDA decreased by 6.1% to EUR 145.77 million, while revenue increased by 21.3% to EUR 618.93 million.
In April, Ukraine increased its total foreign trade in dairy products by 10.7% compared to March to $41.4 million and by 20% compared to February, the press service of the Union of Dairy Enterprises of Ukraine (UDEP) reported.
According to the report, exports of dairy products were 17.8% higher compared to March, amounting to $17.1 million, and 11% higher compared to February, up to $15.4 million.
At the same time, import volumes increased by 6.2% compared to March and amounted to $24.3 million, which is 27.4% higher than in February, when it was recorded at $19.1 million.
Experts pointed out that imports in April were 1.43 times higher than exports. In March, this figure was 1.58 times higher than in February, in February – 1.24 times higher than in January, in January – 1.93 times higher than in December.
“In April 2024, the situation with exports of dairy products improved – they were exported for $ 17.1 million – the last time such volumes were recorded in June 2023. However, import volumes continued to grow – up to $ 24.3 million, which corresponds to the level of January-2024 (imports have been growing for the 2nd month in a row),” the UMPU stated.
In 2023, Ukraine reduced exports of dairy products in monetary terms by almost 30% compared to 2022 and increased imports by more than 15%, the Union of Dairy Enterprises of Ukraine (UDEP) reported on Facebook.
“In 2023, the negative balance of exports and imports of dairy products amounted to $77.2 million, while a year earlier this figure was positive – $28.2 million. Thus, the consumption of dairy products last year “washed out” funds from Ukraine,” the industry association said.
The UMPA emphasized that import growth in 2023 occurred in almost all categories of dairy products. The difference between exports and imports (balance – IF-U) ranged from -289 tons in September to -615 tons in March for fermented milk products and from -1398 tons in January to -2902 tons in December for cheese.
Imports of butter exceeded exports for the first time in a year in October 2023, and in November showed the most negative balance for this commodity.
In addition, in 2023, exports of butter decreased by 45%, while exports of other types of dairy products did not change significantly. In general, due to unfavorable price conditions in 2023, export revenues from sales of this product decreased by 1.4 times compared to the level of 2022.
“In 2023, the volume of imports of butter and whey increased significantly (2.4 times). The volume of cheese imports in physical terms remained at the same level, but increased by 10% in value. In general, this led to an increase in imports by more than 1.15 times compared to the previous year, 2022,” the UUL stated.
In October 2023, Ukraine imported 6.08 thousand tons of dairy products, which is 27.8% more than in September and 35% more than in October 2022, which is the highest figure since March 2022.
According to the Ukrainian Agribusiness Club (UCAB), growth is recorded in all categories of dairy products, but the largest imports are cheese – 3.2 thousand tons. In addition, in October, the volume of butter imports doubled, reaching 619 tons, which is the highest figure since November 2021.
“In total, 48.89 thousand tons of dairy products were imported in 10 months of 2023, which is 6.1% less than in the same period last year, but at the same time, the value is 11.3% higher ($210.2 million),” the UCAB emphasized.
According to the association’s analysts, the volume of dairy exports remained stable for the second month in a row – 8.25 thousand tons, which corresponds to the same period last year. However, in monetary terms, the revenue decreased by 19% to $226.94.
At the same time, UCAB experts noted the intensification of demand in the global dairy market after a nine-month decline in prices. This is confirmed by the FAO index for October and the increase in trading on the Global Dairy Trade: the average value of the FAO Dairy Price Index in October was 111.3 points, which is 2.4 points (2.2%) higher than in September, but still 28 points (20.1%) lower than in the same period last year.
“In October, world prices for milk powder increased the most, mainly due to a sharp increase in import demand under both short- and long-term contracts. An additional factor in the growth of prices for dairy products was the limited supply of milk in Western Europe and some uncertainty about the impact of weather conditions on production in Oceania,” explained UCAB analyst Maxim Hopka.
World butter prices rose under the influence of stronger retail prices before the start of the winter holidays in Western Europe and increased import demand from Northeast Asia. At the same time, cheese prices, on the contrary, slightly decreased due to the weakening of the euro against the US dollar and the growth of export supply from Oceania, UCAB summarized.
In the first nine months of this year, Ukraine reduced the turnover of dairy products by 9.7% compared to the same period last year – from $353.4 million to $318.8 million, the press service of the Union of Dairy Enterprises of Ukraine (UDEP) reported.
According to the published data, the volume of dairy exports decreased by 23.5% in monetary terms to $140.2 million compared to $183.5 in January-September 2022. The business association attributes this decline to the price factor. At the same time, imports increased by 5.2% – from $169.9 million to $178.6 million.
The UMSU noted that the export-import balance for the reporting period was negative – $38.3 million, while for the same period last year it was positive – $13.6 million.
“Of all the exported products, the positive balance was maintained in the trade of butter, as well as milk and cream, both condensed and non-condensed. Exports of other dairy products, such as fermented milk, whey, and all types of cheese, declined significantly. The situation in cheese trade is even worse. Although their exports increased slightly compared to last year, imports grew significantly more, and the balance worsened accordingly,” the association stated.
