Rising prices for dairy products: causes and possible consequences

Ukrainian retail chains have been experiencing a steady rise in dairy prices, according to the monitoring data conducted by the Ukrainian Association of Milk Producers at the end of November 2023.

According to the Association's analyst, Giorgi Kukhaleishvili, the reason for this increase may be the rise in purchase prices for raw milk in the face of insufficient supply in the domestic market and increased production costs at dairy farms.

The monitoring showed that prices for milk, kefir, and sour cream increased by an average of 3.4% in November and by 10.54% year-on-year. At the same time, yogurt, cottage cheese, and butter went up by 2.7% in November and 10.4% year-on-year. Cheese prices increased by 5.6% in November and 38.77% over the past year, with the largest increase in the case of Ukrainian cheese - 100%.

An analyst at the Ukrainian Association of Milk Producers notes that in November, Ukrainian producers faced a shortage of raw materials due to a decrease in the number of cows and deteriorating feeding conditions. Contamination of agricultural land and its unsuitability for growing fodder crops also affect production volumes.

Strong demand and a shortage of raw materials led to a forced increase in milk purchase prices. Rising feed costs, higher prices for premixes and other components for production may be key factors in further price increases for dairy products.

The ongoing strike by Polish and Slovak transporters may also pose a threat of further price increases, which is making it harder to export agricultural products. This could lead to a surplus of dairy products on the domestic market and further maintain high prices for raw milk and other dairy products in Ukraine.

In general, in the context of a limited supply of raw materials and rising producer costs, consumers should prepare for further price increases for dairy products, which may affect the solvency of the population and their consumption opportunities during the heating season.