In spring, the milk market environment has somewhat improved; however, earning opportunities for exporters remain significantly worse than last year, ProAgro Group reports.

In particular, revenue from the “butter + skimmed milk powder” segment is currently lower than a year ago.

Taking into account rising logistics and energy costs, experts consider the current purchase price for raw milk to be justified. Prices are expected to remain stable for at least the next two months.

At the same time, farmers—especially small businesses—continue to report unprofitability in milk production and criticize processors. Industry associations warn that if current price levels persist, investment activity may decline and annual milk production could decrease.

Despite this, experts do not forecast such a sharp drop. However, it is acknowledged that at current price levels, profitability in dairy farming is mainly ensured by highly productive farms. This is already affecting the sector’s dynamics: production growth rates are slowing, and livestock productivity has effectively stopped increasing, likely due to cost-saving on feed.

According to the State Statistics Service, in January–February about 522 thousand tons of milk were delivered to processing enterprises, exceeding last year’s figures.

Amid weak growth in domestic consumption, producers are forced to increasingly focus on exports to balance the market. Although products with higher added value are more promising, entering global markets remains a complex and lengthy process.

As previously reported, the segment of fresh dairy products has long been a key support for dairy companies, as it helps offset losses from commodity dairy production. At the same time, competition in the fresh dairy market is growing much faster than demand.

Source: INFAGRO