Ukraine faces a shortage of butter

High world prices for dairy products, primarily butter, pushing Ukrainian producers to increase exports. According to analytical Department of the Council for food exports (UFEB), January-June 2017 the export of oil from Ukraine grew more than three times, to 12,3 thousand tons compared to the same period last year. The import decreased by 66.5% to 231 tonnes, writes UBR.

Against the background of rising world prices for dairy products, foreign currency earnings from the sale abroad of Ukrainian dairy products (including milk) was almost two times more (215 million dollars) than in the same period of 2016. At the same time, according to the July forecast, the Department of agriculture (USDA) expects a decline in milk production in Ukraine in the current year by 1.73%.

As the Director of the Agency “INFAGRO” Basil vintonyak, now the price of oil in Ukraine has stabilized after significant growth, as consumers simply are unable to pay more. However, this trend could resume in the autumn, when the period of high yields — the so-called season of “big milk.” The shortage of raw materials may occur by the end of the year.

Exports of “milk” is growing, and the production of milk decreases

“We must remember that in winter milk production in the country is not so large so as to satisfy the need for butter. So before it was imported. But now in the world it is very expensive and import, if you will, is too expensive. Here traders will try to capitalize on the deficit,” said vyntonyak.

Developments in the global market plays into the hands of Ukrainian producers. The June index of prices for dairy products, which calculates the food and agriculture organization of the UN (FAO, FAO), reached almost the maximum score in the last three years. The value of 209 items were higher by 8.3% than in may, and from 51.5% higher than in June 2016.

FAO experts explained that the main influence on this indicator in 2017, provided the price of butter, which is just over a month increased by 14%. Limited capacity of key exporting countries does not give hope for a quick change of the trend. As analysts expect, in the future this trend will continue, and will demand more milk, stimulating the growth of purchase prices.

The reasons are two — a reduction in milk production and increased demand for the production of such products as cheese and butter. For the production of 1 kg of butter, fat content 82,5% should be 30-35 liters of milk.

Experts explain increase of demand the fact that the peak of fashion for low-fat food passed, and consumers are returning to products with a higher fat content. However, the food industry in the EU, for higher quality reduces the use of palm oil and actively buys animal fats.

Together with the export of butter the growing and export of cheese products in the production of which uses milk protein — side “product” in the production of oil. In January-June 2017 the export of cheese products has increased three times in real terms.

“So, now that the main oil producers — enterprises engaged in the production of cheese products. When milk fat is oil, and milk protein in cheese product (instead of milk fat used vegetable oil),” explains vintonyak.

Meanwhile, a key factor influencing the price of butter in Ukraine will increase purchasing prices for milk. The actual index of raw milk “INFAGRO” in June totaled 199 points or 37 points (22.8 per cent) higher than the same period last year. In July it is expected the index to rise to 204 points, which is 25.2% higher than a year ago.


  • In Ukraine increase purchasing prices for milk

According to experts, reflected in the domestic oil market and global scenario: in 2017, the prices went up. Now it is impossible to find in large protected areas (wagon — 20 tons) butter fat content of 82% cheaper 125 UAH/kg. But fat product is a 72% (“peasant”), which abroad is not in demand, has fallen (from 120 UAH/kg to 108 UAH/kg opt), since Ukrainian consumers were not ready for the high prices.

“It may be that production of cheese products will fall. Then the oil production will decline, which will lead to its shortage in the market. Besides have taken a lot of the production could not keep up with exports,” — said in “INFAGRO”.

While it is possible to speak about stabilization of the market. In the EU, Ukraine has sold all allowed quota under 1.8 tons. Therefore, the highest price of $5 thousand t (in butter fat 82%) have to sell will not work. Deliveries in Morocco or Egypt, in the best case possible for $4.5 million

Then everything will depend on changes in export prices. If they will not grow, and there will be much interest to export oil abroad.