The decline in procurement prices continues in Ukraine amidst significant surpluses of raw milk, falling global prices for butter and other commodities, and ongoing challenges with the sale of finished products in both domestic and export markets, reports Georghii Kukiashvili, analyst at the Association of Milk Producers (AMP).
The average procurement price for Extra grade milk as of January 7 was 15.20 UAH/kg (excluding VAT), which is 80 kopecks less than the previous month. The price range for this grade on farms varies from 14.30 to 15.50 UAH/kg (excluding VAT). The lower price range decreased by 1.30 UAH, and the upper range by 80 kopecks.
Higher grade milk costs an average of 14.80 UAH/kg (excluding VAT), which is 50 kopecks lower than the previous month. Prices for high-grade milk fluctuate from 14.00 to 15.20 UAH/kg (excluding VAT). The lower price range decreased by 1.10 UAH, and the upper range by 80 kopecks.
The average price for First grade milk was 14.30 UAH/kg (excluding VAT), down 1.00 UAH compared to the previous month. The minimum price on farms was 14.00 UAH/kg, and the maximum price was 14.50 UAH/kg. Both the lower and upper price ranges decreased by 1.00 UAH.
Accordingly, the weighted average price of the three grades was 15.00 UAH/kg (excluding VAT), which is 80 kopecks less than the previous month.
Georghii Kukiashvili notes that the downward trend in procurement prices persists due to substantial raw milk surpluses, falling butter prices, and difficulties in selling finished products domestically and abroad. An unforeseen increase in milk yields last year led to a crash in global butter prices in the third quarter of 2025. Approximately 49% of the raw milk processed in Ukraine is used for butter production. In comparison, only 29% of raw milk in the EU dairy industry goes toward butter. Therefore, price fluctuations for this specific commodity significantly impact procurement prices in Ukraine.
One reason for the price drop is the accumulation of commodity surpluses in warehouses following the suspension of dairy exports to the EU. This occurred because Brussels changed the licensing requirements for quota-based shipments from Ukraine. The final procedures, developed in December, were not shared with stakeholders. Consequently, Ukrainian dairy processors and European traders were unable to submit applications for export permits.
Additionally, in early January, domestic sales of whole milk products traditionally decrease during the New Year holidays. The pricing policy of retail chains does not encourage Ukrainians to increase their dairy consumption. Despite the fall in prices for raw milk and industrial dairy products, retail prices for the final consumer—particularly for butter—remain high. Supermarkets continue to import butter and other dairy products from Poland under long-term contracts, creating stiff competition for domestic products on the shelves.
In the short term, there are risks of not only further procurement price cuts by more than 50 kopecks, but also a reduction in milk collection by plants and a decrease in processing volumes. Dairy processors are struggling to offload surplus finished products, and the production of most items—with the exception of cheese—is currently unprofitable. A potential signal of global demand recovery was the increase in the price index at the 395th GDT auction, the first rise since August 2025. This growth was driven by March contracts. While the pressure from oversupply will likely be felt through January and February, price stabilization and a gradual recovery in raw milk demand within Ukraine are possible in March.
In the long term, dairy farms should move toward establishing their own large-scale, competitive milk processing to minimize the impact of periodic crises and increase business predictability. Even though a milk shortage is expected in Europe by 2030, having cooperative processing capacities in Ukraine would allow farmers to earn steadily, maintain financial stability, and secure their margins. It is essential for milk producers to unite, attract investors from the EU and US, and develop modern processing, as the outdated facilities currently available in Ukraine limit the growth of raw milk production. An alternative path could be closer cooperative agreements between individual dairy farms and partner processing plants to ensure stable sales and acceptable prices for all market participants.
Press Service of the Association of Milk Producers
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