Ukraine's dairy sector consolidates as small herds disappear

Ukraine's milk production base is contracting at the bottom and growing at the top. The number of officially registered farms has fallen by roughly a third over the past five years, with the smallest producers disappearing fastest, The Kyiv Independent reported. At the same time, the number of farms holding more than 1,000 cows keeps rising, shifting the centre of gravity of raw-milk supply towards industrial operations.

From 18 cows to seven

In a village in Chernihiv Oblast, farmer Maryna Hrytsyk said local residents collectively kept 18 cows in 2022. Seven animals remain today, and she expects the village could be left without a single cow by winter. The pattern repeats nationwide: in private households, which typically keep fewer than five cows, animal numbers have fallen by about two-thirds over the past decade.

The economics explain much of it. Hrytsyk puts her production cost at about 13 hryvnias per litre of milk. Farms on average can sell at roughly 15 hryvnias per litre, but processors sometimes offer small suppliers only 9 hryvnias. “Many people who could afford it sold their cattle and left. People do not have money to buy our products. And we cannot lower the price any further because of the high cost of feed,” she said.

War, feed costs and winter

Several pressures are acting at once. The full-scale war has pulled part of the workforce into mobilisation, left land occupied or damaged, and killed animals in front-line areas. Producers also face high feed prices, difficulty finding buyers and falling profitability. Winter sharpens the problem, because animals must be fed on increasingly expensive rations at a time when cow productivity can decline.

• Feed costs rise in winter while milk yields can fall.
• World prices declined after the milk production surplus of 2025, while fuel and fertiliser became more expensive.
• New EU animal health and welfare requirements may oblige Ukrainian producers to make additional investments.

Hanna Lavreniuk, chief executive of the Association of Milk Producers, said the position of small farmers remains very difficult, and that some medium-sized operations are also at risk of ceasing work.

Scale buys better terms

Large farms are strengthening their position as smaller ones exit. Higher volumes give them more favourable selling terms and the capacity to invest in modern equipment, feed and breeding — advantages that compound as the supplier base narrows. Forecasts cited in the report suggest that in 2026 agricultural enterprises could produce more milk than Ukrainian households for the first time.

That would change the structure of raw-milk supply. Processors would source from fewer, larger and more standardised producers, while the dispersed household base that long underpinned collected volumes continues to shrink. Environmental organisations have raised concerns about the concentration, pointing to heavier pressure on soils, pastures and the wider environment.

Import competition and EU access

Ukrainian producers also compete with European goods. Farmers in the EU have access to subsidies, a different tax environment and cheaper logistics, which allows them to reduce costs. The effect is most visible in cheese, where some imported items on Ukrainian shelves cost the same as or less than domestic products.

The policy backdrop remains unsettled. The Financial Times, citing an internal European Commission document on enlargement reform, reported that the Commission proposes to significantly limit Ukraine's access to the EU agricultural market and to EU farm subsidies even after the country obtains membership. For dairy, that leaves scale, cost control and relations with processors as the main levers available to Ukrainian farms, while for small producers the binding constraints stay the same: production cost, sales outlets, a shortage of workers and the consequences of the war.