Ukraine cattle industry continues downward trend - GAIN
Cows on industrial farms increased from 38 to 41%
15 March 2024
3 minute read
By: Most Ukrainian cattle are dairy or dual-purpose animals, and the dairy business remains a major force impacting beef production and exports, according to a recent US Department of Agriculture (USDA) Global Agricultural Information Network (GAIN) report. After a significant drop in animal inventory and beef production in 2022, the industry continued its downward trend in 2023. However, the share of cows in efficient industrial farms increased from 38 to 41%, and most of the decline was attributed to households.
Increased dairy enterprise efficiency contributed to stabilisation of the cow inventory. As the domestic consumption of dairy products stabilised in 2023, the animal inventory decrease slowed down. The trend for animal inventory stabilisation is expected to continue in 2024, but the number of cattle will still be declining. Exports of both live cattle and beef are expected to be strong, but animal exports will be smaller than in 2023 due to a lower inventory.
Being a function of Ukraine’s dairy production, Ukrainian cattle operations suffered significant direct and indirect losses from Russia’s aggression that started in February 2022. The cattle population consists
predominately of dairy and dual-purpose animals and is mainly concentrated in rural households. In 2022, a lot of cow owners slaughtered their animals because of fleeing the country, moving away from the war zone, or due to the loss of the milk sale chain. The dairy industry appeared to be vulnerable to war impacts due to its dependence on stable cash flow from milk sales. Closures or breaks in operations by many dairy processors resulted in mass short-term animal slaughter.
After a significant bovine animal population drop in 2022, the situation somewhat stabilised in 2023. The majority of the inventory decrease took place at the expense of low-performing animals in the industrial
sector and households. The share of industrial farms in the total cattle population grew from 38% in 2021 to 41% in 2022 and 2023. As refugee outflow levelled in mid-2023, this stabilised domestic demand for dairy products, and high milk prices resulted in smaller animal inventory decreases. This trend is expected to continue in 2024.
Dairy producers learned how to manage some war risks. Animal inventory in 2024 will continue to decrease, but less than expected. Ukraine rebuilt its energy generation and power grid, making it resilient to Russian missile attacks. Power outages and associated additional costs for in-house power generators were one of the major concerns for 2023. A lot of producers suffered from power outages in the 2022/23 winter and noted significant production cost increases. According to industry sources, many farms continued to work on energy backup improvements through 2023-24. The situation is not expected to change in 2024 as Ukraine continues to fortify its air defence capabilities and increase its power grid stability. No significant outages are reported as of mid-February 2024.
Low feed prices were another significant factor that helped the Ukrainian industry keep production costs low and offset some wartime losses. Ukrainian crop farmers continued having concerns about markets
for their products, which coupled with higher logistics costs, resulted in lower prices in 2023. Access to export markets remained constrained, especially before the Black Sea Grain Initiative (BSGI) and also in the late days of its existence when very few ships were able to be inspected. Following Russia’s termination of the BSGI, an Ukraine-established export corridor in the Black Sea took off in October 2023. Exports from Ukraine’s Odesa region ports have resumed through this route, exceeding BSGI levels, though Russia’s attacks on Black Sea ports and Danube port infrastructure have continued.
