Prices for meat and milk are rising: due to mobilization, domestic livestock is being slaughtered in Ukrainian villages

Mass mobilization in Ukraine directly affects agriculture.

“In many villages, there are very few able-bodied men left, they are all at war. Because of this, households are getting rid of domestic livestock. And since the share of private farms in the Ukrainian milk and meat market has traditionally been high, the reduction in livestock is already affecting both supply and prices,” says Oleg Pendzin, head of the Economic Discussion Club.

According to the head of the agrofirm “Kolos” from the Kiev region, Leonid Tsentilo, since autumn, prices for milk in Ukraine have sharply risen – they have increased almost every week. Over four months, milk prices have risen by a third, reaching about 16 hryvnias per liter – which is almost the European price. The main reason, according to Tsentilo, is the new wave of cattle reduction. Moreover, mainly at the expense of the private sector: people simply slaughter livestock because “it’s difficult to take care of them.”

As a result, dairy products have already become more expensive. According to the State Statistics Service, in December of last year, the retail price of milk increased by 2.3%, cheese and cottage cheese by 1.5%, and butter by 2.7%.

Moreover, as Pendzin says, prices are only going to rise – both milk and meat will become more expensive.

Experts have long been talking about how mobilization is effectively leaving Ukrainian villages without labor. According to Alexander Shatalov, owner of the “Tsipa” brewery and the “Rozental” eco-farm in the village of Kvasy in the Zakarpattia region, many local residents serve in the ranks of the Armed Forces of Ukraine, which causes big difficulties in recruiting personnel, especially specialized ones like veterinarians and technologists. People are being sought even in neighboring regions. But there is also a shortage of specialists even for local firms.

“Mobilization is particularly massive in rural areas. It’s easier to find men there – they’re all visible. Moreover, rural residents, as practice shows, are less likely to ‘dodge’ – even those who are entitled to deferment, upon receiving a summons, go to the military enlistment office. Many simply don’t know how to protect their rights,” says Rostislav Kravets, head of the “Kravets and Partners” law association.

“People living in villages are effectively at their place of registration. It’s harder to find people in the city; they are often not registered in the city or don’t live where they are registered,” explained Solomiya Bobrovska, a member of the parliamentary committee on national security issues, in a recent interview, elucidating the “rural” bias of mobilization.

She also mentioned the corruption factor: in big cities, it’s often easier to “negotiate” with military enlistment offices than in villages. Moreover, heads of rural communities have been given the right to issue summons, and mobilization plans are passed down to them.

Nevertheless, there are few men of draft age left in many villages. Thus, there is practically no one to do the heavy agricultural work. Agricultural enterprises are already suffering from this.

But there is another consequence.

“Many households in villages are getting rid of domestic livestock. Men are being drafted, and women simply can’t handle taking care of livestock, it’s hard work. Therefore, cows and pigs are massively sent for slaughter, often to intermediaries and at big discounts, and young livestock is not taken,” says Oleg Pendzin.

Since the beginning of the war in Ukraine, the population of large horned livestock has sharply decreased. In 2022, it decreased by more than 300,000 – from 2.64 million to 2.3 million.

The greatest damage from the war has been inflicted on dairy farming: the number of cows has decreased by almost 200,000 (to 1.35 million). The number of pigs has also decreased by almost 650,000 (to 4.9 million).

Previously, the “livestock plague” was primarily explained by military actions, as well as the outflow of refugees from the country. Much of the livestock simply perished. This is confirmed by data on the number of animals slaughtered. Their numbers also decreased in 2022 – by 10-12%. If animals were simply slaughtered, the statistics would be completely different.

Data on livestock for 2023 have not yet been disclosed by the State Statistics Service. But, as reported by the Milk Producers Association, the negative trend persists. Last year, the population of large horned livestock decreased by almost 5%, and cows by 1.2%.

Moreover, in the private sector, the reduction in livestock is occurring much faster than in specialized farms. In a year, the population of large horned livestock among private individuals decreased by 8.2% (more than 108,000 heads), and cows by 4.6% (which is 41,900 heads). For comparison: in the industrial sector, the population of large horned livestock decreased by only 3.2% last year.

So, in the private sector, the reduction in livestock is much more active than in the industrial one. Moreover, the direct impact of military actions here is minimal: rural residents themselves are getting rid of livestock, says Pendzin.

But the problem is that the main livestock farming in Ukraine is traditionally concentrated in private yards. According to the Milk Producers Association, about 70% of milk production comes from private individuals.

In the pig farming segment, the industry’s dependence on private households is less pronounced, but still quite significant: private individuals keep up to 50% of the total population.

Therefore, the abandonment of domestic livestock by peasants has already affected raw material prices – both meat and dairy.

Leonid Tsentilo says that at the end of last year, milk prices simply skyrocketed. If milk procurement cost 12 hryvnias per liter in the summer, by the end of autumn it was already 16 hryvnias, and premium milk was being sold for 17-18 hryvnias.

Moreover, milk prices were rising literally every week. In the autumn, the cost of milk always rises due to the seasonal decline in yields. But this time another factor intervened – a sharp decrease in supply.

“The dairy herd continues to decrease, especially in private households. Large farms almost do not slaughter cattle, on the contrary, they even try to increase the population, because dairy farming is currently very profitable. Our own farm has allowed us to cover losses on grain,” says Leonid Tsentilo.

Expensive raw materials have already affected retail prices as well. According to the State Statistics Service, in December of last year, milk in Ukrainian stores became 2.3% more expensive, cheese and cottage cheese – by 1.5%, and butter – by 2.7%.

The head of the Dairy Alliance, Sergey Vovchenko, claims that prices should have risen even more. But manufacturers are holding back for now.

“A reassessment usually takes a quarter. And at the request of retail chains, we cannot raise prices by more than 5% at a time, whereas milk raw materials are now becoming more expensive every two weeks, and its share in the cost of dairy products is almost 70%,” says Vovchenko.

So, prices for dairy products will continue to rise, even if raw materials stop becoming more expensive – because there is a certain gap between the cost price and the retail price, which manufacturers will surely want to compensate for. According to Tsentilo’s forecast, prices for raw materials will also continue to rise, as there is already a shortage in the market.

Therefore, according to Pendzin’s forecast, all dairy products will increase in price by at least 2-3% per month.

In pig farming, the connection between the reduction in livestock and retail prices for meat is also evident. But for now, it’s beneficial for processors. Due to the fact that peasants are massively slaughtering pigs, at the end of last year, there was even an oversupply in the market, and as a result, purchase prices went down, noted in the Association “Swine Breeders of Ukraine”.

Analyst of the association, Alexandra Bondarskaya, says that the average purchase price of slaughter pigs in December 2023 decreased by 13%, to 67.2 hryvnias per kilogram. In January, it was another minus 10 hryvnias per kilo.

In retail, pork also became cheaper for the New Year, albeit not significantly – by 0.8% (to 202.7 hryvnias). In January, discounts became more significant – pork can now be bought for 197 hryvnias per kilogram.

From September 2023 to January 2024, pork in retail has become cheaper by 11 hryvnias per kilogram.

And purchase prices during the same period plummeted from 84.2 hryvnias to 57.2 hryvnias per kilogram. All because of the surplus of supply: livestock is still being massively sent for slaughter, and the market simply cannot digest such a quantity of “extra” meat.

But the “meat feast” will soon come to an end, and prices will start to rise. The first major price increase is expected by Easter – then prices for meat and meat products at retail can immediately jump by 10-15%, or even more. After that, they will continue to rise by 3-5% per month.