A shrinking supply of raw milk and high demand for dairy protein are creating the conditions for further increases in raw-milk prices in Ukraine. At the same time, the impact of the war, high production costs, a lack of funding for modernization, and the risk of infectious disease outbreaks are intensifying pressure on dairy farms.
The average farm-gate price for Extra Grade milk in the second half of October stood at UAH 16.60/kg excluding VAT, up UAH 1.00 from the previous month. Farm-gate prices for this grade ranged between UAH 15.90 and UAH 17.20/kg excluding VAT. Compared to the second half of last month, the lower price limit increased by UAH 1.10, while the upper limit rose by UAH 1.20.
Higher Grade milk averaged UAH 16.20/kg excluding VAT, representing a 75-kopiyok increase over the previous month. Prices for Higher Grade milk ranged from UAH 15.40 to UAH 16.70/kg excluding VAT. Compared to the first half of last month, the bottom of the price range rose by 80 kopiyoks, and the top of the range increased by UAH 1.00.
The average price for First-Grade milk reached UAH 15.65/kg excluding VAT, up 95 kopiyoks from the previous month. The minimum price at farm level was UAH 15.00/kg, while the maximum price reached UAH 16.00/kg. Both the lower and upper price boundaries increased by UAH 1.00.
Consequently, the weighted average price across all three grades reached UAH 16.40/kg excluding VAT, an increase of UAH 1.00 compared to the previous month. Compared to October 2025, milk prices decreased by 70 kopiyoks.
As of October 26, demand for raw milk remained strong, despite a slight weakening in demand for exchange-traded dairy commodities compared to the beginning of the month. This trend continued to support higher farm-gate prices. Since September, dairy farms have been operating near breakeven levels, allowing them to cover operational expenses, pay salaries, and settle tax obligations. However, financial resources for modernizing production remain insufficient; without investment in development, some smaller farms may succumb to economic pressures and exit the market.
The decline in raw milk production continues to support price growth. According to market participants, the supply deficit was a key driver of rising raw milk prices in September, with growth accelerating in October. The dairy sector is also suffering from the loss of production capacity caused by the war. Cow herds are being relocated to safer regions, some animals are subject to emergency slaughter, and others are killed in shellings.
Strong global demand for dairy protein alongside slowing supply growth of raw milk is impacting Ukraine's dairy sector. In the US, domestic consumption of dairy proteins is so high that it limits export opportunities. Weather risks pose an additional factor that could affect raw milk production in New Zealand and North America. Higher prices for exported dairy products have improved the financial performance of dairy processors and preserved profitability for key export categories such as whey, butter, and milk powder, creating a foundation for higher raw milk prices.
However, a substantial global supply of milk fats is holding back a recovery in butter prices, which had previously driven raw milk price growth. In 2024 and the first half of 2025, high butter prices prompted some industrial consumers to switch to alternative fats, reducing demand. While demand is gradually recovering, it is doing so more slowly than expected.
Infectious diseases present another major threat to dairy cattle farming. In the Chernihiv region, there is a risk of Lumpy Skin Disease (LSD) spreading due to an outbreak in russia. LSD can lead to reduced milk yields, reproductive issues, and livestock mortality. Another emerging risk is the Shamonda virus, which threatens European livestock farming, causing decreased milk production, fever, diarrhea, appetite loss, and lethargy. The spread of this infection could lead to a temporary drop in raw milk production and force farmers to incur additional biosecurity costs. In the long term, the risk of abortions and a reduction in replacement heifers is of particular concern. Notably, on some farms in France where the Shamonda virus was recorded, raw milk production dropped by three-quarters.
From November 1, farm-gate prices for Extra and Higher Grade milk are expected to rise further amid shrinking supply. At the same time, higher prices do not mean Ukrainian producers have gained room for active expansion. War, power outages, and the need to switch to alternative energy sources continue to drive up production costs. Operating diesel generators at current fuel prices adds approximately UAH 3.5–4.0 to the cost of producing each kilogram of milk. Thus, the current increase in raw milk prices helps farms stay afloat rather than setting the stage for investment. The future resilience of the dairy sector will depend on production profitability, global market dynamics, and the ability of farms to maintain robust biosecurity standards.