The profitability of milk processing in Ukraine begins at approximately 150 tonnes per day, while in Europe this threshold is significantly higher — around 500 tonnes per day, according to Yaroslav Nitsak, CEO of GEA UkraineProAgro Group reports.

According to him, some milk producers are interested in installing their own processing equipment, but the key factor in such projects is the available volume of raw milk.

“A large dairy farm can produce around 30–50 tonnes of milk per day, but the profitability of processing in Ukraine starts at roughly 150 tonnes daily, while in Europe it is about 500 tonnes per day,” Nitsak explained.

He noted that much depends on herd productivity. As an example, the largest dairy holdings in Ukraine currently produce around 160–220 tonnes of milk daily.

However, even with such volumes, processing is not profitable for every producer.

“Processing 150 tonnes of milk per day remains profitable mainly for existing enterprises that produce fresh dairy products, have a recognizable brand and loyal consumers,” he said.

At the same time, the fresh dairy products market in Ukraine is highly competitive and characterized by low margins, making it difficult for new players to enter.

According to Nitsak, producers may therefore focus on either craft dairy products or commodity dairy goods such as milk powder, casein, butter or milk fat. However, in this segment economies of scale play a decisive role.

“For these products, profitability typically starts from processing 400–500 tonnes of milk per day,” he added.

Earlier it was reported that dairy farms in Ukraine are currently operating at a loss. As of February 20, the average purchase price for raw milk from processing plants was UAH 13.5 per kilogram, while production costs ranged between UAH 15.5 and UAH 16 per kilogram. As a result, up to 20% of producers may be forced to shut down their farms.

Source: Latifundist.com