Garasimyuk K. Y., Juisov O. A., Polyviana O. V.

Oles Honchar Dnipropetrovsk National University


The importance of dairy industry in the agricultural sector of Ukraine is indisputable. Labor consuming nature of dairy cattle-breeding is on the one side, the necessity of providing the populationwith dairy products, and processing plants – with raw materials is on the other side.

The formation and function of a dairy products market is important for providing consumers’ needs in the market as increased demand for dairy products is specified by their high utility.

During the period of Ukraine independence the level of milk production in all categories of farms decreased more than two times and reached about 11.3 million tons in 2011, according to the State Statistics Committee. Indicators of milk production in 1990 amounts 24.5 million tons (Fig. 1).

Fig. 1. Structure of milk production in Ukraine during 1990-2010 years, thousand tons

Fig. 1. Structure of milk production in Ukraine during 1990-2010 years, thousand tons

This trend is characterized by the following factors: the livestock is declining annually, its productivity remains low, the breeding is not conducted properly, the material and technical base of the industry is been destroyed and is falling into decay, namely the level of mechanization of production processes in it. Thus the reduction of raw materials as the main current formative resource that providesappropriate supply in the market takes place.

Because of imbalance between income of population and milk prices effective demand of vast majority of households remains critical, while consumption of milk and dairy products is below the minimum standards. Only under the conditions of raising living standards the consumption of dairy products can be close to recommended rates by quality parameters.

Raw milk refers to the resource the reproduction of which takes certain time, proper climatic conditions, additional costs etc. Thus, the production of milk and its processing is characterized byscarcity. The following features can be the basis for such a claim:

- growth rates of dairy cattle herd and its productivity are determined by the duration of the process of reproduction and genetic progress;

- forage, which affects the productivity of the herd depends on climatic conditions and financial means of agricultural farms;

- most of produced milk is consumed by households or sold in-kind in commodity markets.

Except for limited amounts of raw materials, there are the following factors which affect the formation of a dairy market (Fig. 2).

Fig. 2. Indicators and limiting factors of milk and dairy products market in Ukraine 

Fig. 2. Indicators and limiting factors of milk and dairy products market in Ukraine

The commodity milk and dairy products market has specific characteristics associated with their peculiar feature – limited time sale and respectively decreasing radius of raw materials delivery and uselessness for long-term storage. A stable market and supply of raw milk to milk processing factories should be created throughout the year to ensure a non-stop operation formanufacturers and, accordingly, to provide the population with the products of essential needs.

Thus, for development of milk and dairy products market in Ukraine we need to develop a corporate strategy, which takes into account the peculiarities of Ukrainian economy in WTO andfurther trade liberalization at the present stage, which is connected with possible accession of Ukraine to the EU.

For the development of dairy industry it’s, firstly, necessary to solve a strategic issue, which is associated with resource deficit, as the dairy market is limited by herds of dairy cattle and theirproductivity. Specialization of production, limited raw milk, impoverished assortment, the purchasing power of the population, the number of customers have an influence on a dairy market and its filling. The functioning of both markets is influenced by such factors as climatic, technical and technological, orga­nizational and economical.