As we continue our spring review of the agri-food market, we focus on another essential part of the Ukrainian food industry: butter and dairy fats.
Despite the difficulties of recent years, including those associated with the full-scale war, logistical barriers and rising energy costs, the industry is showing a gradual, albeit uneven, recovery. Butter and dairy fats play a key role in the Ukrainian food industry and have a notable impact on the country’s economy as a whole. This sector is responsible for the creation of employment opportunities in rural areas, the promotion of the dairy farming development, and the generation of stable foreign exchange earnings through exports.
In 2024, production of dairy fats and butter gradually recovered due to improved performance of farms, which mainly operated in safer regions, and upgraded technological processes at processing plants. The consolidation trend continued throughout the year, with large companies strengthening their market position, while smaller producers faced logistical, access to raw materials and working capital issues. Domestic demand remained moderate. However, a decline in consumer spending power resulted in a shift in demand from premium products to more economical options. There was also growing interest in spreads as a more affordable alternative to butter.
Agri-processing companies have invested significantly in refrigeration equipment, automation of packaging processes and the introduction of energy-saving technologies. Government and international support programmes played an important role in this, helping to partially upgrade fixed assets and reduce supply chain losses, which allowed companies to significantly improve their performance.
In 2024, the logistics of domestic butter and dairy fats production remained an important part of the agricultural sector, despite the difficulties caused by the war and damage to infrastructure. The main production facilities are located in the central and western regions, where dairy is delivered to processing plants, requiring precise temperature control.
Demand for Ukrainian butter and dairy fats in foreign markets remained stable, with the main consumers in the EU, the Middle East and Asia. Growing global consumption of natural dairy products supported demand for Ukrainian products, encouraging producers to improve quality and adapt packaging to market requirements.Trade agreements and participation in international exhibitions helped to promote the “Made in Ukraine” brand and sign new contracts, even in the face of global instability.
The production of butter and dairy fats in Ukraine has stabilised following a prolonged downward trend from 2014 to 2023. The forecast for the coming years does not anticipate significant growth, with a possible recovery only occurring in the event of structural changes in the market.
In 2024, the cost of Ukrainian products has increased significantly and is almost in line with international prices. This indicates an increase in competitiveness and a gradual approach to global pricing standards. For the industry to be stable and profitable, measures are needed to improve production efficiency.
Summarising the current landscape of the butter and dairy fats industry in Ukraine, it is evident that there are indications of a recovery in the industry in 2024, albeit with limited growth potential in the coming years. Key factors for consideration include stable demand in foreign markets, rising product costs and the need to modernise infrastructure.
Please, refer to our detailed report for more in-depth analysis of the butter and dairy fats production market in Ukraine.
BDO in Ukraine has a dedicated agricultural group with a deep understanding of the market, which regularly conducts analytical research on the agri-food sector, including the production of butter and dairy fats. Earlier, as part of our reviews, we have already shared two interesting reports: one outlines the prospects for the pork market and the other analyses the situation with egg production in Ukraine.
If you are a business operating within butter and dairy fats industry and require in-depth analytics, market research, new opportunities for development or improved production efficiency, please contact our specialists.
*This publication contains general information and does not constitute professional advice or service. You should consult a qualified professional advisor before making any decision or taking any action that may affect your finances or business. Please contact BDO in Ukraine for further advice and support.
Despite the difficulties of recent years, including those associated with the full-scale war, logistical barriers and rising energy costs, the industry is showing a gradual, albeit uneven, recovery. Butter and dairy fats play a key role in the Ukrainian food industry and have a notable impact on the country’s economy as a whole. This sector is responsible for the creation of employment opportunities in rural areas, the promotion of the dairy farming development, and the generation of stable foreign exchange earnings through exports.
Current industry landscape and infrastructure
In 2024, production of dairy fats and butter gradually recovered due to improved performance of farms, which mainly operated in safer regions, and upgraded technological processes at processing plants. The consolidation trend continued throughout the year, with large companies strengthening their market position, while smaller producers faced logistical, access to raw materials and working capital issues. Domestic demand remained moderate. However, a decline in consumer spending power resulted in a shift in demand from premium products to more economical options. There was also growing interest in spreads as a more affordable alternative to butter.Agri-processing companies have invested significantly in refrigeration equipment, automation of packaging processes and the introduction of energy-saving technologies. Government and international support programmes played an important role in this, helping to partially upgrade fixed assets and reduce supply chain losses, which allowed companies to significantly improve their performance.
Foreign market logistics and demand
In 2024, the logistics of domestic butter and dairy fats production remained an important part of the agricultural sector, despite the difficulties caused by the war and damage to infrastructure. The main production facilities are located in the central and western regions, where dairy is delivered to processing plants, requiring precise temperature control.Demand for Ukrainian butter and dairy fats in foreign markets remained stable, with the main consumers in the EU, the Middle East and Asia. Growing global consumption of natural dairy products supported demand for Ukrainian products, encouraging producers to improve quality and adapt packaging to market requirements.Trade agreements and participation in international exhibitions helped to promote the “Made in Ukraine” brand and sign new contracts, even in the face of global instability.
Production dynamics in Ukraine
The production of butter and dairy fats in Ukraine has stabilised following a prolonged downward trend from 2014 to 2023. The forecast for the coming years does not anticipate significant growth, with a possible recovery only occurring in the event of structural changes in the market.
Production costs in the Ukrainian and global markets
In 2024, the cost of Ukrainian products has increased significantly and is almost in line with international prices. This indicates an increase in competitiveness and a gradual approach to global pricing standards. For the industry to be stable and profitable, measures are needed to improve production efficiency.Summarising the current landscape of the butter and dairy fats industry in Ukraine, it is evident that there are indications of a recovery in the industry in 2024, albeit with limited growth potential in the coming years. Key factors for consideration include stable demand in foreign markets, rising product costs and the need to modernise infrastructure.
Please, refer to our detailed report for more in-depth analysis of the butter and dairy fats production market in Ukraine.
BDO in Ukraine has a dedicated agricultural group with a deep understanding of the market, which regularly conducts analytical research on the agri-food sector, including the production of butter and dairy fats. Earlier, as part of our reviews, we have already shared two interesting reports: one outlines the prospects for the pork market and the other analyses the situation with egg production in Ukraine.
If you are a business operating within butter and dairy fats industry and require in-depth analytics, market research, new opportunities for development or improved production efficiency, please contact our specialists.
*This publication contains general information and does not constitute professional advice or service. You should consult a qualified professional advisor before making any decision or taking any action that may affect your finances or business. Please contact BDO in Ukraine for further advice and support.
