Ukraine’s dairy industry is one of the country’s leading agricultural sectors, with cheese production being a particularly significant and strategically important part of it.
In our spring review of the agri-food market, the next important segment of agricultural production is dairy cheese production. This key industry affects both the domestic food balance and Ukraine’s export potential.
In 2024, the Ukrainian dairy cheese market began to stabilise gradually after a significant decline caused by the war, as well as logistical and production difficulties. Although production volumes remained below pre-war levels, positive trends continued, particularly among farmers and medium-sized enterprises in the safer regions. The market became more concentrated, with major players increasing their market share while smaller producers reduced their output or left the industry due to a lack of financing and logistical issues. Domestic consumption remained low but showed signs of moderate growth.
Infrastructure and investment
In 2024, dairy companies focused on modernising production lines, upgrading packaging equipment, and implementing energy-efficient storage solutions. Many of these changes were made possible thanks to government programmes and international grants aimed at developing the processing industry. Growing demand for quality products stimulated the launch of new investment projects, including the construction of local workshops, short- and medium-term storage warehouses, and logistics centres. Meanwhile, cooperation with European technology partners helped to adapt products to export standards. However, investment remained uneven, with most of it concentrated in the central and western regions of the country.
Logistical challenges and demand in foreign markets
Last year, demand for Ukrainian dairy cheeses abroad grew gradually, particularly for high-quality products made with natural ingredients. The main buyers were EU countries, as well as Middle Eastern and Asia-Pacific markets, where there is a demand for niche products with a clear geographical origin. The global trend towards naturalness, and the growing popularity of organic, non-GMO and 'Made in Ukraine' labels, has boosted the competitiveness of Ukrainian products. Exports encouraged producers to adapt their recipes to local preferences, helping them to enter new markets. Participation in international exhibitions and forums also strengthened Ukraine’s position.
Production dynamics in Ukraine
Unfortunately, Ukraine’s production of dairy cheese reached its lowest level in many years in 2024 due to a significant decline in volumes caused by lower milk yields and a reduction in the number of cattle. This was exacerbated by a decrease in purchasing power and export losses due to military operations. However, production is expected to gradually increase from 2026, indicating that the industry has the potential to stabilise and recover further with government support.
Export activity and product value
The export of dairy cheese from Ukraine decreased significantly in 2024, with exports falling to 6 thousand tonnes, which is only 11% of total production compared to 13% in 2023. This indicates a loss of foreign markets and increased dependence on domestic consumption, resulting in risks to foreign exchange earnings and slower production due to limited access to foreign markets. At the same time, the price of Ukrainian dairy cheese increased to $5,203 per tonne in 2024, significantly higher than the global average of almost $4,399. This increase was driven by rising costs, particularly due to higher energy, raw materials, transport and military factors. These price dynamics demonstrate increased cost pressures and a loss of price competitiveness for Ukrainian products in the global market.
Summary
Ukraine’s dairy cheese production has the potential for moderate growth in the coming years, but achieving this will require significant investment, enterprise modernisation, strengthened cooperation between small producers, and improved logistics processes. Production is forecast to gradually increase to around 62,000 tonnes by 2033, which is still well below pre-war levels. While this indicates the industry's adaptation to new realities, deep investment and structural changes are needed to restore production levels of over 100,000 tonnes, typical of the 2014–2018 period.Please refer to our report for more information on the state of the industry and its prospects.
In addition, previous publications have covered overviews of the agri-food market, including the situation in butter and dairy fat production, as well as egg, pork and beef production.
The dairy industry remains a vital part of Ukraine’s agricultural sector, and we greatly value the efforts of cheese producers in the current challenging climate. The Ukrainian dairy cheese market has moderate growth potential, but further investment, modernisation, and increased industry collaboration are required to achieve its full development and efficiency.
The team of BDO in Ukraine is ready to support your business in these challenges. Our experts are familiar with all aspects of the agri-food sector and can provide professional support. Get in touch with us if you would like more information. We would be delighted to assist you.
*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 Ukraine for further advice and support.
