Ukraine’s dairy sector is undergoing a deep structural shift, with milk production declining sharply as pressure mounts on household farming. In November 2025, national milk output fell by 11% month-on-month, underscoring the widening gap between industrial producers and subsistence farms.
November 2025 Production Snapshot
Total milk production stood at 507 thousand tonnes in November, reflecting a pronounced contraction compared to October. The decline, however, was uneven across production segments. The industrial dairy sector showed relative resilience, producing 266 thousand tonnes, a marginal increase of 0.5% month-on-month. This growth lifted the industrial share of total production to 52%, further consolidating its dominance.
In contrast, household farms experienced a severe contraction, with milk yields dropping by 21% compared to both October and the previous year. Household producers now account for 48% of total output, but their share continues to erode as economic pressures intensify.
Regional Concentration Raises Risk Exposure
Ukraine’s milk supply remains highly concentrated. Around 55% of raw milk is sourced from enterprises in just five regions: Poltava, Cherkasy, Khmelnytskyi, Vinnytsia, and Chernivtsi
This concentration amplifies vulnerability to regional disruptions, whether climatic, logistical, or geopolitical. Any sustained weakness in these core regions could have disproportionate consequences for national milk availability and processing capacity. Amid the broader slowdown, Zakarpattia emerged as a rare bright spot, recording 36% production growth over the first 11 months of 2025, highlighting how targeted investment and farm structure can still deliver gains despite adverse conditions.
Household Sector at Risk of Collapse
The sharp decline in household milk production reflects deeper structural challenges. Rising input costs, labour shortages, limited access to finance, and declining profitability are accelerating exits from the sector.
According to industry expert Georgiy Kukhaleyshvili, the contraction is primarily driven by subsistence farms. He warns that without cooperative models, smallholders risk exclusion from formal processing channels. If farmers fail to consolidate by 2030, household milk deliveries could effectively disappear.
Outlook for 2026: Consolidation Accelerates
Looking ahead, forecasts for 2026 point to further strain. Total milk production could fall to 6.8 million tonnes, driven by potential farm closures and herd rationalisation. Enterprises with fewer than 400 cows are particularly vulnerable, facing mounting cost pressures and limited economies of scale. This trend signals an acceleration of consolidation, with production increasingly shifting towards larger, more capitalised industrial farms.
Global Demand May Offer a Window of Opportunity
Despite near-term challenges, longer-term global trends suggest a possible turning point. From 2027 onwards, global dairy demand is expected to exceed supply, setting the stage for market recovery. By 2028, shortages of high-quality raw milk are forecast, followed by a potential structural milk deficit in the European Union by 2029–2030.
For Ukraine, these shifts could create export opportunities provided the sector can stabilise production, improve quality consistency, and integrate smaller producers into cooperative or industrial supply chains.
Strategic Imperative: Adaptation and Cooperation
Ukraine’s dairy sector stands at a crossroads. The continued decline of the household segment highlights the urgency of structural reform. Cooperative models, improved access to finance, and integration into organised supply chains will be critical to maintaining production capacity and competitiveness.
While global demand dynamics may improve over the medium term, the ability of Ukrainian producers to benefit will depend on how effectively they adapt to evolving economic and market realities. Without decisive action, the current production decline risks becoming a long-term contraction rather than a temporary adjustment.