A Dairy Revival in Ukraine
With enhanced access to laboratory, veterinary, and education services, Ukraine’s smallholder dairy farmers are elevating the quality of their products and tapping new markets.
Ukraine has traditionally been known as the region’s “land of milk and honey,” but transitioning its agrarian economy into the 21st century has been challenging. Four million small family dairy farms and private rural households produce more than half its gross agricultural product and 75 percent of its dairy. Smallholder farmers often lack the resources to invest in the latest technology, and when new food sanitation standards emerged under the Ukraine-European Union Association Agreement, dairy farmers couldn’t meet expectations.
Accustomed to hand-producing lower-quality milk, of which 88 percent is second grade, many farmers culled their herds rather than make the necessary investments. Only extra-grade milk will fully meet the European Union’s standards, and farmers lacked the knowledge, technology, and market to improve production.
In 2017, USAID’s Agriculture and Rural Development Support (ARDS) program, implemented by Chemonics International, saw an opportunity to bring dairy market actors together to improve the quality of milk, revitalize the market, and increase farmers’ incomes and resilience.
“We could hardly meet our ends in running our farm,” explains dairy farmer Volodymyr Hvostov. “We realized that we could improve the situation only by producing extra-grade milk … So, we made the business plan and took the decision to invest in our farm.”
Collaborating, Investing, and Learning
In cooperation with the national Association of Milk Producers (AMP), the ARDS project identified opportunities for innovation and growth. Ukraine’s relatively low consumption of milk (139 liters per capita versus 239 in Romania) suggested considerable potential for the dairy industry. Local demand for extra-grade milk would increase, as schools, kindergartens, hospitals, and supermarkets would now be required to serve only extra-grade dairy products. The extra-grade milk could be distributed within the region and would set the industry up for export to new markets within the European Union and beyond.
To help transform the dairy industry nationally, ARDS teamed up with AMP to establish a central laboratory for testing milk quality and livestock health, pilot a new milk collection model, and enhance farmer education.
ARDS and AMP co-invested in Uman Laboratories in Cherkassy to establish local capacity for testing. The laboratory combines milk quality and livestock productivity testing, allowing milk producers to meet international standards for raw milk quality and safety, improve the welfare and health of their cows, and adjust feed mix ratios based on milk testing results. More than 4,000 rural family farms and 150 small and medium entrepreneurs in 20 regions benefit from the information provided by the new lab.
“During just one quarter, we moved from second-grade milk to extra. We had a terrible situation with mastitis because, before collaborating with the laboratory, 100 of our 825 cows had a clinical form of the disease, and the antibiotics we had been using had no results. Today, the number of [cows with mastitis] is less than 1 percent, and we stably produce extra-quality milk,” says Anatoliy Vitruk, a dairy farmer from Volyn Oblast.
In 2018, Uman Laboratories developed an innovative mastitis kit, a set of tests for rapid identification of mastitis and sensitivity to antibiotics for farmers to use. The laboratory continually works on improving the kit and employs a group of IT specialists to develop a portable scanner to read kit results at farms.
Supporting Dairy Farmers Caught in Conflict
Farmers in the eastern regions of Ukraine face additional challenges due to the current conflict with Russia. ARDS turned its attention to Luhansk Oblast, which has been heavily affected by military action since 2014. The extensive migration of local inhabitants from Luhansk and the loss of nearby markets in industrial cities caused a 25 percent decrease in the dairy cattle population between 2014 and 2016.
Transforming the fragmented milk production system required a close collaboration — more stable market links — between the milk input suppliers and the dairy processor. In response to a competitive bidding process, ARDS selected Bilovodsk Butter Factory, located in the most remote district of Luhansk (15 kilometers from the Russian border), to strengthen its role as lead buyer and processor of extra-grade milk.
With ARDS support, the provincial government created a program to underwrite the purchase of small, automated milking machinery for each dairy-producing household in Luhansk — in all, 30 percent of the total population in the oblast. Bilovodsk Factory provided extra support to its 3,000 raw milk input suppliers, offering loans to farmers who lacked the financial resources to buy the milking machinery. With the new equipment, more than 50 percent of private dairy farmers shifted from manual to mechanical milking in 2018, which immediately improved the quality of raw milk collected.
ARDS and AMP held training sessions for milk collectors at Bilovodsk Factory to provide more comprehensive support to its dairy suppliers. AMP specialists taught farmers how to operate their new machinery and how to prevent mastitis and other disease through basic hygiene practices and eliminate use of antibiotics.
“We have implemented the HACCP [hazard analysis and critical control points] standards at the factory and worked with our private households to improve the input milk quality,” says Valentyna Chubenko, director of the Bilovodsk Butter Factory. “The export market has tough requirements to export products, and we were so excited to receive positive feedback on our [products].”
AMP also opened a consultancy services center in Luhansk to provide veterinary services for local farmers in the area close to the conflict to help make them profitable.
“We started taking services from the Center for Veterinary Services a couple months ago and already have the first positive results: The herd productivity increased on average three liters per cow per day, while the quality of milk is [high],” explains Vladimir Vasiliev, director of a dairy farm in Luhansk. “It is very difficult to find a veterinary specialist here. Therefore, the regular visits of highly skilled veterinarians bring a real benefit to our farm.”
Since the start of this collaborative activity, the number of private households with cows in Luhansk Oblast increased by 19 percent and the activity has been expanded in 2019 to continue to build cattle populations. The quality of collected milk improved, and now 79 percent of the milk that Bilovodsk Factory processes is first-grade quality, up from 21 percent in 2017. In 2018, the factory significantly improved the quality of produced butter to meet international export standards and exported more than 125 tons of high-quality butter to Algeria and Morocco.
Ms. Chubenko is grateful for the support from ARDS and is excited about the company’s prospects. “Now we feel we can face the new, challenging standards to produce dairy. Now we understand what potential we have for our growth.”