Ukraine’s Dairy Sector Still Devastated by Russian Invasion
More than a year after Russia invaded Ukraine, the war continues to have devastating consequences on Ukrainian society and businesses, including dairy. On March 6, Ukraine’s economy ministry lowered the country’s forecast for 2023 gross domestic product (GDP) from 3.2% to 1%.
According to the Kyiv School of Economics, the damage from Russia’s war on the Ukraine has caused $143.8 billion in economic damage. The severe damage caused to Ukraine’s infrastructure system, including transportation and energy, has rippled through most business sectors, including dairy, according to Monica Ganley, analyst with the Daily Dairy Report and principal of Quarterra, a consulting firm in Buenos Aries.
“Dairy farms, especially those in the north and northeastern parts of Ukraine, have suffered extreme damage from the war,” Ganley said.
According to a recent report from USDA’s Foreign Agricultural Service, Ukraine’s dairy herd declined by more than 100,000 head, or 6.3%, to 1.49 million between January 2022 and January 2023. While the Russian invasion has accelerated contraction of the Ukraine’s dairy herd, the country’s dairy sector has been under pressure for decades. Since January 2021, the national herd has fallen by 232,000 cows.
“Many of Ukraine’s dairy producers run small operations, and without deep financial resources, they are heavily dependent on a continuous income stream from the sale of their milk,” Ganley noted. “When the war began in early 2022, many dairy processors were forced to shutter their operations and ceased paying producers. Without milk checks coming in, producers whittled down their herds.”
As Ukraine pushed Russian advances back toward the border, some of the infrastructure damage was repaired, and processors began to rebuild their operations. By late last year, many processors were, once again, open to taking in more milk. Ukrainian producers, however, have been reluctant to rebuild their herds because they are still operating in an environment of persistent uncertainty, she added.
“Dairy producers in Ukraine also cut back their operations due to labor shortages,” Ganley noted. “Many dairy workers left to fight on the front lines, and the exodus of 3 million people seeking refuge in nearby countries and elsewhere resulted in a shortage of available labor across the value chain.”
Curfews and logistical challenges created by road closures further exacerbated labor shortages, which created hiring challenges and new traffic patterns for agricultural goods.
“The Russian invasion of Ukraine has been devastating in many ways and the country’s dairy sector has been just another casualty of the conflict,” Ganley said. “It will likely to years for the sector to rebuild.”
