How Modernizing Ukraine’s Dairy Industry Could Drive Food Security and Sustainable Growth

The study shows that modernizing Ukraine’s dairy industry, especially large milk and cream producers can strengthen food security, support rural jobs, and advance sustainable development while helping the country meet EU standards. It estimates that about €126 million in targeted investment by 2030 could turn the dairy sector into a quiet but powerful driver of post-war recovery and resilience.

From Kyiv to Krakow and Kaunas, researchers from the National Scientific Centre “Institute of Agrarian Economics,” the National University of Life and Environmental Sciences of Ukraine, Kyiv National Economic University named after Vadym Hetman, the University of Agriculture in Krakow, Vytautas Magnus University, and the Ukrainian University in Europe have come together to examine an unlikely but powerful driver of recovery: Ukraine’s dairy industry. Their study argues that modernizing milk and cream production is not just about agriculture, it is about food security, rural livelihoods, sustainable development, and Ukraine’s path toward the European Union.

Why Dairy Matters More Than It Seems

Milk and dairy products are everyday goods, but their role in Ukraine’s economy is far from ordinary. The dairy sector supports thousands of rural jobs, supplies essential nutrition, and anchors food security at a time of deep uncertainty. When dairy production weakens, the effects spread quickly, farm incomes fall, food prices rise, and export opportunities shrink. The researchers show that the sector’s health is closely tied to broader economic and social stability, making it strategically important during wartime and reconstruction.

The Modernization Gap

Despite its importance, much of Ukraine’s dairy industry still relies on outdated equipment and partial quality control systems. While about half of raw milk already meets EU quality standards, many processing plants struggle to comply fully with European rules on hygiene, traceability, animal welfare, and environmental protection. The study highlights that limited investment in innovation, such as modern milking systems, cooling equipment, automation, and digital quality control, has slowed progress. Without modernization, Ukrainian producers risk losing competitiveness in one of the world’s most strictly regulated food markets.

Big Producers, Bigger Potential

To understand where investment would work best, the researchers compared large, medium, and small dairy enterprises using financial and performance indicators such as profitability, liquidity, productivity, and stability. The conclusion is clear: large enterprises are best positioned to absorb innovation. They have stronger finances, better access to capital, more advanced technologies, and greater ability to cope with shocks like pandemics or war. Medium-sized firms show potential but need support, while small producers face serious barriers due to limited resources. This does not mean small farms are unimportant, but it does suggest that large enterprises can act as anchors for recovery and modernization across the sector.

From Decline to Recovery

Production data from 2014 to 2024 tells a turbulent story. Milk and cream output by large enterprises declined gradually for years, fell sharply during COVID-19, and dropped further after the war began in 2022. Yet the study identifies a turning point: in 2023 and 2024, production started to rise again. Using this trend, the researchers developed three future scenarios, pessimistic, realistic, and optimistic, depending on how the war, logistics, and policies evolve. The realistic scenario, which assumes continued uncertainty but gradual stabilization, suggests that steady recovery is possible if modernization continues.

Investing in a Sustainable Future

Based on the realistic scenario, the study estimates that about €126 million in investment will be needed by 2030 to modernize large dairy enterprises. This figure may seem modest compared to other reconstruction needs, but its impact could be wide-reaching. Modernized farms produce safer, higher-quality milk with fewer losses. Upgraded processing plants can make higher value-added products like cream, butter, and cheese, boosting exports and strengthening domestic supply. Just as importantly, modernization supports the Sustainable Development Goals, creating jobs, improving nutrition, reducing environmental damage, and encouraging climate-friendly technologies such as energy-efficient equipment and biogas systems.

The researchers are careful to note uncertainties, including wartime data gaps and unpredictable external shocks. Still, their message is simple and compelling: targeted investment in dairy modernization can deliver economic, social, and environmental benefits at the same time. In a country rebuilding under extraordinary pressure, milk and cream may not dominate headlines, but they could quietly help nourish a more resilient and sustainable Ukraine.