The flow of milk for processing continues to decline

The transition from old to new feed stocks, as well as the negative weather factor in July - early August, led to a decrease in milk yield and supply of raw materials for processing in Ukraine. – PioneerProduct

This year's production figures have noticeably sagged compared to last year, which provoked a sharper increase in the purchase price of raw milk compared to expectations in August.

Milk production by agricultural enterprises for seven months has been more or less stable (-1.1%), but the figure for July 2020/July 2021 is very alarming - a drop of almost 5%. Given that the number of livestock in the category remained the same, the quality of the forage and the weather factor can be considered the reason.

The increase in the purchase prices of raw milk and new stocks of feed will definitely “spread their wings” for milk producers, but processors are becoming more and more squeezed into price pincers. Earlier in the summer, producers of fresh products and cheeses traditionally made money by taking advantage of the seasonal decline in purchase prices. But in 2021, the situation worsened noticeably: in winter, profitability in most cases went negative, and in summer it was not possible to recoup due to stable prices for raw materials.

As a result, the volumes of processing under the fresh category were reduced due to the reduction of summer promotions in almost all key market operators. Now, in order to stay in the black against the background of seasonal inflation for raw materials, processors are forced to quickly change wholesale selling prices for products. And the flexibility of negotiations with networks about their restrictions and the ability of the consumer to respond to the constant rise in the price of products on the shelf come to the fore.

PioneerProduct