A new study by KSE Agrocenter reveals operational “bottlenecks” hindering the dairy industry’s development from within.

Here are 5 main problems that are holding back the Ukrainian dairy sector right now:
“Shadow” market and retail dictates: Official livestock statistics often do not correspond to reality, and “shadow” imports (especially of cheese) reach 30%, creating unfair competition. An additional blow is the delays in payments from supermarkets. In fact, dairy farmers are lending to retail at their own expense, washing out working capital from the industry.

• The problem of scale: Small and medium-sized farms lose efficiency. Experts say: an economically profitable herd starts from 800-1000 cows (optimal logistics and cooling). The cooperative model that saves farmers in the EU does not work in Ukraine due to tax and legislative barriers.
• Short contracts = high risks: Ukraine lacks long-term contracts with transparent price formulas. Price risk is unevenly distributed among farmers, processors, and retailers, making it impossible to plan farm operations for years ahead.
• Outdated processing: Our factories often lose the technological race to our neighbours (e.g. Poland). Due to a lack of investment in deep processing, we produce simple products with low margins, while imports bring in high-margin goods.
• Chaotic state support: Subsidies are often scattered and ineffective. Instead of stimulating innovation, state policy sometimes leads to artificially low prices for producers below the world level.

Conclusion: To compete in the EU, we need not only to translate regulations, but also to build transparent market relations and invest in technology.
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