Developing dairy farming and improving product quality

Abstract

The need to find ways to improve the quality characteristics of milk as a basis for increasing the competitiveness of dairy products in the global market determines the relevance of the study. Ukraine’s dairy industry is one of the critical ones in the agricultural sector of the economy, as it provides the country’s population with vital foodstuffs. The purpose of this study was to substantiate the areas of solving organisational and economic problems of development of the dairy industry to meet the needs of the domestic market with quality dairy products and increase export potential. The study was conducted to identify the main reasons for the transformational changes that have taken place in dairy farming and to outline the promising areas for the development of this industry in the context of improving product quality. This study focused on European and national requirements for the quality of raw milk. The following methods of economic research were used in the analytical material: economic and statistical, comparative analysis, graphical, logical generalisation, systematic approach, systemic and structural analysis, calculation, and design. The study analysed the data of agricultural enterprises and households engaged in milk production in Ukraine for 2010-2022 and recalculated the purchase prices for raw milk in relation to the European quality indicators. The findings of this study showed that ensuring the competitiveness of dairy products depends on the quality of milk. It was found that it is higher in European countries, and therefore high standards for the quality of raw milk become a barrier to entry into European markets for most domestic dairy processing enterprises. Accordingly, the state’s strategy should focus on increasing the production of high-quality raw milk and growing export potential by forming specialised milk production cooperatives for dairy processing enterprises. The practical significance of the obtained results is that the author’s recommendations can be used by agricultural enterprises or private households in their everyday activities

Full text

UDC 006.83:636.2.034
DOI: 10.48077/scihor1.2024.140
Developing dairy farming and improving product quality
Larysa Bal-Prylypko
Doctor of Technical Sciences, Professor
National University of Life and Environmental Sciences of Ukraine
03041, 15 Heroiv Oborony Str., Kyiv, Ukraine
https://orcid.org/0000-0002-9489-8610
Liudmyla Berezina
Doctor of Economic Sciences, Professor
Poltava State Agrarian University
36003, 1/3 Skovorody Str., Poltava, Ukraine
https://orcid.org/0000-0003-2843-5893
Ludmila Stepasyuk*
PhD in Economic Sciences, Associate Professor
National University of Life and Environmental Sciences of Ukraine
03041, 15 Heroiv Oborony Str., Kyiv, Ukraine
https://orcid.org/0000-0002-7258-9243
Olena Cherednichenko
PhD in Technical Sciences, Associate Professor
National University of Life and Environmental Sciences of Ukraine
03041, 15 Heroiv Oborony Str., Kyiv, Ukraine
https://orcid.org/0000-0001-8908-4113
Anastasiya Lialyk
PhD in Technical Sciences, Assistant
Ternopil Ivan Puluj National Technical University
46001, 56 Ruska Str., Ternopil, Ukraine
https://orcid.org/0000-0003-3013-1784
Article’s History:
Received: 10.08.2023
Revised: 13.12.2023
Accepted: 27.12.2023
Suggested Citation:
Bal-Prylypko,L., Berezina,L., Stepasyuk,L., Cherednichenko,O., & Lialyk,A. (2024). Developing dairy farming and
improving product quality. Scientic Horizons, 27(1), 140-151. doi: 10.48077/scihor1.2024.140.
SCIENTIFIC HORIZONS
Journal homepage: https://sciencehorizon.com.ua
Scientific Horizons, 27(1), 140-151
Copyright © The Author(s). This is an open access article distributed under the terms of the
Creative Commons Attribution License 4.0 (https://creativecommons.org/licenses/by/4.0/)
*Corresponding author
Abstract. The need to nd ways to improve the quality characteristics of milk as a
basis for increasing the competitiveness of dairy products in the global market
determines the relevance of the study. Ukraine’s dairy industry is one of the critical
ones in the agricultural sector of the economy, as it provides the country’s population
with vital foodstuffs. The purpose of this study was to substantiate the areas of solving
organisational and economic problems of development of the dairy industry to meet
the needs of the domestic market with quality dairy products and increase export

Bal-Prylypko et al.
Scientific Horizons, 2023, Vol. 27, No. 1
141
potential. The study was conducted to identify the main reasons for the transformational changes that have taken
place in dairy farming and to outline the promising areas for the development of this industry in the context
of improving product quality. This study focused on European and national requirements for the quality of raw
milk. The following methods of economic research were used in the analytical material: economic and statistical,
comparative analysis, graphical, logical generalisation, systematic approach, systemic and structural analysis,
calculation, and design. The study analysed the data of agricultural enterprises and households engaged in milk
production in Ukraine for 2010-2022 and recalculated the purchase prices for raw milk in relation to the European
quality indicators. The ndings of this study showed that ensuring the competitiveness of dairy products depends
on the quality of milk. It was found that it is higher in European countries, and therefore high standards for the
quality of raw milk become a barrier to entry into European markets for most domestic dairy processing enterprises.
Accordingly, the state’s strategy should focus on increasing the production of high-quality raw milk and growing
export potential by forming specialised milk production cooperatives for dairy processing enterprises. The practical
signicance of the obtained results is that the author’s recommendations can be used by agricultural enterprises
or private households in their everyday activities
Keywords: milk; quality of dairy products; international standards; producers; release price
INTRODUCTION
The problem of producing high-quality milk is multi-
faceted. In scientic discussions, various methods are
discussed to determine the quality characteristics of
products and their impact on the efciency of the in-
dustry. In production and meeting the growing needs of
society, the requirements for the quality characteristics
of dairy products are constantly increasing. Therefore,
for Ukrainian dairy products to be competitive in inter-
national markets, they must meet the safety and quality
standards that have already become the norm for the
world’s leading producers.
Ensuring the quality, safety, and competitive-
ness of products is a key factor in the development
of the dairy industry. Thus, M.Nikolaienkoand L.Bal-
Prylypko (2020) note that the guarantee of product
quality is compliance with international ISO standards,
which are actively implemented by Ukrainian dairy
processing enterprises. M.RahmanandD.Hryzo(2021)
note that the dairy and dairy processing industries in
Ukraine have many issues that hinder their effective
development and specify that domestic milk produc-
ers are trying to use modern European technologies,
because in many developed countries, dairy produc-
ers adhere to stricter milk standards than in Ukraine.
P. Borawskietal.(2020a) emphasise the signicance of
the dairy sector for the economy of the EU, which is
the largest producer of milk in the world. Furthermore,
European producers are focused on producing safe
dairy products in compliance with certain limits on the
number of somatic cells and bacteria in raw milk.
I. Fedulova (2018) considers the entry of dairy
processing enterprises into foreign markets as a ma-
jor factor in the current stage of dairy farming devel-
opment and notes that the small-scale sector of the
industry cannot fully meet all the needs of the pro-
cessing industry with high-quality raw milk, which
is mostly of the second grade. The author notes that
the only strategic vector for the development of dairy
farming can be cooperation of private farms and strict
adherence to production technologies to obtain milk
of proper quality. A. PopescuandE.Angel (2019) also
believe that improving the quality of milk, primarily
in terms of the number of bacteria and somatic cells,
is an opportunity to increase prots in dairy farming.
Scientists say that improving milk quality will increase
customer condence and demand for dairy products.
O. Shpychaketal.(2022) emphasise the need for funda-
mental changes in the organisation and management
of the dairy farming system and the creation of a suita-
ble market infrastructure. Scientists believe that the de-
velopment of the milk market environment by a consid-
erable number of small farms leads to a decline in the
quality and, consequently, price indicators of products.
K. McGarr-O’Brien et al.(2023) have an extraordinary
perspective on this issue and characterise the sustain-
ability certication standards used in dairy production.
They emphasise the diversity of existing standards, al-
lowing farmers to choose the one that suits their be-
liefs or stage of development.
O.Kozak(2020) examines the factors that have a
major stimulating impact on the development and fur-
ther structural changes in the dairy industry. The author
also notes that even in the context of the war waged by
the Russian aggressor, Ukraine stays part of the global
market for milk and dairy products. Despite the shock at
the beginning of the war, the domestic industry man-
aged to restart in the new reality and, just as before the
full-scale invasion, is experiencing global trends in the
development of the milk and dairy products market. In
this context, P.Borawskietal.(2020b) also consider the
impact of the global crisis on the dairy market.
However, the relevance of the issues under study
does not diminish due to a considerable number of is-
sues that impede the development of the industry, in-
cluding martial law, the COVID-19 pandemic, declining
consumer demand in the country, rising unemployment,

Developing dairy farming and improving product quality
Scientific Horizons, 2023, Vol. 27, No. 1
142
increased production costs caused by the crisis in the
energy system, and the depreciation of the hryvnia,
which necessitates further comprehensive research
and development of recommendations for their solu-
tion. Thus, the purpose of this study was to analyse the
current state of the Ukrainian milk market, determine
the optimal price level depending on the quality of raw
milk in agricultural enterprises and substantiate the
ways to improve the efciency of the dairy industry in
the context of increasing its export potential.
MATERIALS AND METHODS
The study was conducted for 2010-2022 based on
data and indicators from the State Statistics Service
of Ukraine (n.d.), the Association of Milk Producers – a
non-prot non-governmental professional association
of farms specialising in dairy farming (n.d.), the meth-
odology of the National Research Centre “Institute of
Agrarian Economics” – “Expected indicators of produc-
tion costs, performance, and protability in agricultur-
al enterprises of Ukraine in 2022: methodology and
calculations (December 2022)” (Lupenkoet al., 2023),
the ndings of previous own studies and research of
other Ukrainian scientists, namely, I.Fedulova (2018),
O.PetrychenkoandV.Rossokha(2018). The study also
used available statistical data from the following of-
cial websites: CLAL, an Italian consulting company on
dairy economics that analyses the dairy market and its
development trends, generalising through information
and training activities (CLAL.it., n.d.), and the Ministry of
Agrarian Policy and Food of Ukraine (Ministry of Agrar-
ian Policy and Food of Ukraine, n.d.) on the nancial
and economic activities of agricultural enterprises in
Ukraine.
The economic research was based on the following
principles: the choice of its area – research on the de-
velopment of dairy farming and improvement of product
quality; formulation of goals – identication of causes
and consequences of changes in the state of the dairy
industry, outlining the prospects for its development in
the context of improving product quality; accumulation
of facts and bringing them into a certain order – collec-
tion and processing of statistical information, systema-
tisation of such information in the form of tables and
graphs; sustainable theoretical generalisations – analy-
sis of research and publications over the past 3-5 years;
development of measures to determine the level of milk
price depending on the quality of raw milk.
The dialectical method of cognition formed the
theoretical and methodological framework of the study.
A systematic and comprehensive approach was also
used to investigate Ukrainian and foreign scientic
provisions on the fundamental principles of analysing
the state of dairy farming and factors inuencing the
quality of raw milk to improve its competitiveness. The
information on the state of the domestic dairy industry
was processed, described and summarised by selecting
information from the Internet and printed media. To
full the purpose of this study, the following methods
were used: monographic method – to investigate and
systematise Ukrainian and foreign scientic achieve-
ments and practices in determining the main provisions
of functioning and development of the dairy industry of
Ukraine; method of system-structural analysis – to an-
alyse the economic activity of agricultural enterprises
engaged in milk production; method of cause-and-ef-
fect analysis – to identify urgent problems in the ac-
tivities of enterprises in this industry; calculation and
constructive method – to calculate the main indicators
of development and economic efciency of milk pro-
duction in agricultural enterprises of Ukraine; method
of logical generalisation – to formulate conclusions
and proposals. The dynamics of milk production in
Ukraine by major commodity producers and indicators
of its economic efciency were investigated using eco-
nomic-statistical and economic-mathematical methods.
Microsoft Excel software was used for statistical pro-
cessing of the study results.
The requirements for raw materials necessary to
produce dairy products were compared following the
national standard DSTU 3662:2018 (2019). To adjust
the selling price of milk, Methodological regulations
on the organization of state statistical monitoring of
the supply of milk to processing enterprises (n.d.) were
considered.
RESULTS AND DISCUSSION
Since 1991, the situation in Ukraine’s dairy industry has
been radically different from what is happening glob-
ally. While in 1991, the world produced 440 million
tonnes of milk, in 2021 it was 726 million tonnes. In
1991, Ukraine’s gross milk yield was 24.5 million tonnes,
and in 2022 it was 7.7 million tonnes. Thus, global milk
production increased by 1.5 times, while in Ukraine it
decreased by three times (Zhupinas,2023). One of the
factors of negative impact on milk supply is a constant
decrease in livestock, which leads to a decrease in dairy
production, conicting interests of milk producers and
processors, and a decrease in per capita consump-
tion of milk and dairy products ( Cherednichenko &
Pashchenko, 2018). The dairy industry suffered signi-
cant losses in the rst months of the war in 2022.
The occupation of the territories and hostilities
meant that a considerable number of livestock was
simply destroyed by the Russian invaders, and another
part of the farm was forced to be sold for nothing or
transported to safer regions. Thus, the industry lost 1
million tonnes of milk due to the war (Association of
milk producers in Ukraine, n.d.). An analysis of the dy-
namics of milk production in Ukraine over 2010-2022
suggests that in all categories of farms, the average
annual decline rate is 2.3%, including 2.0% and 3.7%
in agricultural enterprises and households, respectively
(Table1).

Bal-Prylypko et al.
Scientific Horizons, 2023, Vol. 27, No. 1
143
Table 1. Dynamics of milk production in Ukraine, thous. t
Years Farms of all categories
incl.
enterprises households
thous. tonnes % of total thous. tonnes % of total
2010 11,249 2,217 19.7 9,032 80.3
2011 11,086 2,246 20.3 8,840 79.7
2012 11,378 2,535 22.3 8,842 77.7
2013 11,488 2,583 22.5 8,906 77.5
2014 11,133 2,648 23.8 8,485 76.2
2015 10,615 2,669 25.1 7,946 74.9
2016 10,387 2,711 26.1 7,676 73.9
2017 10,281 2,766 26.9 7,515 73.1
2018 10,064 2,756 27.4 7,309 72.6
2019 9,663 2,729 28.2 6,935 71.8
2020 9,264 2,761 29.8 6,502 70.2
2021 8,714 2,768 31.8 5,946 68.2
average annual growth
(decline) rate, % -2.3 2.0 – -3.7 –
2022 7,768 2,644 34.0 5,124 66.0
2022 to 2021, % 89.1 95.5 – 86.2 –
Source: calculated by the authors of this study based on data from the State Statistics Service of Ukraine (n.d.)
In 2022, all categories of farms produced
7,768 thous. t of milk, agricultural enterprises –
2,644 thous. t, households – 5,124 thous. t, which is
10.9%, 4.5%, and 13.8% less than in 2021, respectively.
Thus, households have reduced milk production the
most substantially. This is explained by the fact that
they were forced to sell or abandon their livestock
when eeing the war from the occupied territories and
the active combat zone.
An analysis of livestock productivity over 2010-2022,
both in agricultural enterprises and households, suggests
its growth. Thus, in 2022, the milk yield per cow in agri-
cultural enterprises was 5,119kg, while in households –
6,611 kg, which is 66.3% and 11.2% more than in 2010,
respectively. Thus, according to the research, agricultural
enterprises provided a much higher level of productiv-
ity than households and had an average growth rate of
5.1% compared to 1% for households (Fig.1).
3,000
4,000
5,000
6,000
7,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
kg
enterprises households
Figure 1. Average annual milk yield per cow in Ukraine,kg
Source: compiled by the authors of this study based on data from State Statistics Service of Ukraine (n.d.)
In 2022, interruptions in the supply of feed and
veterinary medicines and power outages led to a de-
cline in cow productivity, which ultimately led to a de-
crease in gross milk production. In 1990, there were
643 dairy plants in Ukraine, and as of 1January2022,
only 140 of them had received permission to produce
dairy products, of which 111 were operating. Since the
outbreak of full-scale hostilities, the dairy processing
industry has lost 38 enterprises in the occupied and
temporarily occupied territories, and therefore as of
1December2022, only 73 were operating, which is al-
most 9 times less than in 1990. The total capacity of

Developing dairy farming and improving product quality
Scientific Horizons, 2023, Vol. 27, No. 1
144
the remaining enterprises is 4.9mlnt of raw materials.
However, they are still under-utilised with raw materi-
als, and therefore their unit costs are much higher than
if they were fully utilising their capacity. The logistics
aspect also plays a major role. Provided that the farm
produces 15-20t of milk, the processor is ready to take
the raw materials even 300km away. However, there
are many small milk producers in Ukraine whose trans-
portation is not very protable for the processor (Agro-
Times, n.d.).
An analysis of milk supply to Ukrainian processing
enterprises in 2010-2022 shows that its quantity has
decreased. Thus, in 2022, 2,740 thousand tonnes of
milk were supplied, which is 42.8% less than in 2010.
Notably, the structure of milk supply has changed con-
siderably over the relevant period: while in 2010, 41.7%
of milk came from agricultural enterprises and 56.1%
from households, in 2022 the share of agricultural en-
terprises increased to 86.7%, and the share of house-
holds decreased to 13.3% (Table2).
Table 2. Milk supply to Ukrainian processing enterprises, thous.t
Indicators 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Supply of milk and dairy products
for processing, total 4,793 4,615 4,716 4,570 4,647 4,251 4,183 4,348 4,179 3,800 3,512 3,198 2,740
of which were purchased 4,537 4,547 4,692 4,545 4,617 4,090 3,710 3,928 3,809 3,462 3,289 3,032 2,657
incl. purchased from: enterprises 1,890 2,030 2,278 2,325 2,428 2,413 2,512 2,689 2,720 2,610 2,556 2,478 2,305
share of enterprises, % 41.7 44.6 48.6 51.2 52.6 59.0 67.7 68.5 71.4 75.4 77.7 81.7 86.7
households 2,544 2,155 2,007 1,824 1,737 1,346 1,198 1,239 1,089 851 733 554 353
share of households, % 56.1 47.4 42.8 40.1 37.6 32.9 32.3 31.5 28.6 24.6 22.3 18.3 13.3
other business entities 302.6 362 407 396 452 331
Received on a tolling basis 42.1 59 15 6 7 138 441 396 347 318 203 148 74.8
Own-produced milk that was
processed 13.9 9 10 19 23 24 32 25 25 20 20 18 7.8
Source: calculated by the authors of this study based on data from the State Statistics Service of Ukraine (n.d.)
One of the key factors in incentivising dairy producers
is the price, the increase of which affects the efciency
of the enterprise (Bal-Prylypkoetal.,2022). Today, due to
the involvement of intermediary structures, the purchase
price for dairy products increases by 15-20%. Finished
products are also sold from the processing plant to re-
tailers through intermediary structures, which are usually
recommended by the retailers where the products are
sold. Depending on the range of products and the cor-
responding surcharges for the sale of dairy products in
the retail network, the wholesale price of the company’s
dairy products increases by 25-60%. Often, the same
product passes through two or three of these structures,
which leads to an increase in price. Retailers sell at their
own margin, and producers have no other alternative.
As a result of price distortions, raw milk is sold for
virtually nothing, and prices for industrial products and
services are so high that milk production for most farms
becomes unprotable or even detrimental. Thus, in
2022, agricultural enterprises sold milk at UAH 10,678
per tonne, while the retail price of milk in the retail
network was UAH 35-42 per 1 litre (Fig.2).
Figure 2. Average milk purchase price, UAH/t
Source: calculated by the authors of this study based on data from the State Statistics Service of Ukraine (n.d.)
In March 2022, the situation in dairy farming was
more critical than before due to the disruption of the
supply chain for raw milk, nished products from dairy
farms and dairy processing plants, which resulted in a
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
enterprises 2,973 3,093 2,690 3,337 3,499 4,216 5,277 7,059 7,386 7,958 8,565 9,93610,678
households 2,297 2,310 1,905 2,351 2,425 2,841 3,530 4,933 4,758 5,412 5,5746,921 7,220
-1000
11,000
9,000
7,000
5,000
3,000
1,000
UAH/t
2,973
2,297
3,093
2,310
2,690
1,905
3,337
2,351
3,499
2,425
4,216
2,841
5,277
3,530
7,059
4,933
7,386
4,758
7,958
5,412
8,565
5,574
9,936
6,921
10,678
7,220

Bal-Prylypko et al.
Scientific Horizons, 2023, Vol. 27, No. 1
145
4.6EUR/100kg decrease in purchase prices. Due to the
increase in exports in May-July 2022, the price of raw
milk stabilised at 37.6-37.8EUR/100kg. However, as a
result of the dollar’s appreciation against the hryvnia
in July, the price of milk dropped to 32 EUR/100 kg.
Subsequently, the strengthening of the hryvnia and in-
creased export activity led to an increase in the price
of milk in hryvnia terms, and in November the price
of milk reached 36EUR/100 kg (Association of milk
producers in Ukraine, n.d.).
At the end of 2022, purchase prices for raw milk
were 40% lower than in the EU and 11% lower than
in 2021. The Ukrainian dairy market is affected by the
following factors that constrain milk price increases:
reduced demand for dairy products, rising production
costs due to the energy crisis, and lower real incomes,
which leads to a decrease in dairy consumption in the
short term. However, there is underutilised capacity in
the dairy industry that could be used to further de-
velop the market, depending on the strength of ex-
ternal and internal demand. It is believed that due to
the diversication of foreign markets, support of the
Ukrainian consumer as a result of the reduction of
the VAT rate on milk and dairy products and the im-
plementation of the School Milk programme, favour-
able conditions will be created for the recovery of the
Ukrainian dairy industry (Association of milk producers
in Ukraine, n.d.).
Over 2010-2022, milk production at agricultural en-
terprises has been consistently protable. Milk retained
its status as the most protable livestock product. Thus,
in 2022, the protability of production of this product
in agricultural enterprises was 17.4% (Fig.3). However,
the authors believe that achieving 20% protability is
insufcient for expanding business and attracting con-
siderable investment resources.
Figure 3. Indicators of economic efciency of milk production
Source: calculated by the authors of this study based on data from the State Statistics Service of Ukraine (n.d.)
0
200
400
600
800
1,000
1,200
0
5
10
15
20
25
30
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
UAH/t
profitability, %
profitability, % sales price per tonne, UAH
Dairy farming faces a signicant risk of becoming
unprotable, as the industry has been stagnating for a
long time and requires not only government support
but also a systematic approach to effective strategic
decisions at the level of each business entity, regions,
and the entire country. Approximation to European
standards requires compliance with new require-
ments for raw materials needed for dairy production.
Ukrainian producers were given time, the so-called
transition period, to bring the quality of cow’s milk
up to the required standards. In 2018, a new nation-
al standard DSTU 3662:2018 (2019) was introduced,
which reinforced the requirements for the raw milk
production process and its quality. In the grading sys-
tem, milk is divided into grades (extra, premium, rst)
(Stepasyuk,2020).
However, the implementation of these requirements
for the safety and quality of milk and dairy products
was postponed for two years until 1 January 2023 (Or-
der of the Ministry of Agrarian Policy and Food,2019).
The extension of the transitional period for certain
measures on state control of raw milk production and
marketing was intended to provide time for milk pro-
ducers and processors to harmonise their relations and
create an effective organisational mechanism for the
Ukrainian dairy industry. The state should be actively
involved in the implementation of the Strategy for the
Development of Dairy Farming and the Dairy Process-
ing Industry, the development of relevant policies and
the distribution of functions of competent authorities,
including the State Service of Ukraine for Food Safety
and Consumer Protection (Avercheva,2021).
An analysis of milk supply to processing enterprises
shows that milk produced by agricultural enterprises
is of much higher quality. Thus, the share of milk that
meets the requirements of the extra grade is 47.2%,
while the highest and rst grades are 32.6% and 19.3%,
respectively. The quality of raw milk supplied for pro-
cessing by households is quite different, with no extra
milk at all, only 3.9% of milk of the highest quality, and
the vast majority of milk being of the rst and second
quality, namely 77.1% and 19% (Fig.4).

Developing dairy farming and improving product quality
Scientific Horizons, 2023, Vol. 27, No. 1
146
Figure 4. Structure of milk sold by agricultural enterprises and households, 2022
Source: calculated by the authors of this study based on data from State Statistics Service of Ukraine (n.d.), Сlal.it (n.d.).
extra
47%
premium
33%
grade I
19%
grade II
1%
extra premium
premium 4%
grade II
19%
grade I
77%
premium grade II
undergrade grade I
It was found that the quality of milk sold by agricul-
tural enterprises tends to improve (Table3). And this is
natural, as producers seek to earn more income, and the
price difference between grade I and grade II ranges
within 10-20%, while between grade I and non-grade
milk this deviation is over 30%. In addition, agricultural
enterprises already have the proper conditions (mini-
mal contact with air and prompt cooling) to produce
such milk, and most of them breed highly productive
cows with proper housing, feeding, and veterinary care.
Table 3. Quality of milk supplied for industrial processing, by grade
Indicators 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Agricultural enterprises
Volume of milk supplied, thous.t 1,919 2,160 2,193 2,298 2,287 2,375 2,533 2,560 2,428 2,348 2,253 2,107
in terms of milk with basic fat
content 2,030 2,278 2,325 2,428 2,413 2,512 2,688 2,720 2,610 2,556 2,478 2,305
including by grade:
– extra 113 120 227 223 248 366 441 586 710 885 973 1089
specic weight, % 5.6 5.3 9.8 9.2 10.3 14.6 16.4 21.6 27.2 34.6 39.3 47.2
– prime grade 669 711 798.7 821 850 923 987 1036 938 874 875 750
specic weight, % 33.0 31.2 34.4 33.8 35.2 36.7 36.7 38.1 35.9 34.2 35.3 32.6
– grade I 1,157 1,311 1,182 1,251 1,197 1,056 1,018 895 844 776 614 444
specic weight, % 57.0 57.6 50.8 51.5 49.6 42.0 37.9 32.9 32.3 30.4 24.8 19.3
– grade II 83 128 113.7 129 113 160 235 194 97 16 16 21
specic weight, % 4.1 5.6 4.9 5.3 4.7 6.4 8.7 7. 1 3.7 0.6 0.6 0.9
Undergrade 8 7 3.7 5 5 6 7 9 21 5 0.5 0.2
specic weight, % 0.4 0.3 0.2 0.2 0.2 0.3 0.3 0.3 0.8 0.2 0.0 0.0
Share in purchased milk, %
– fat 3.6 3.59 3.6 3.59 3.59 3.6 3.6 3.6 3.66 3.7 3.74 3.72
– protein x x x 3.07 3.05 3.06 3.06 3.1 3.13 3.16 3.19 3.20
Households
Volume of milk supplied, thous.t 2,094 1,954 1,771 1,699 1,312 1,161 1,200 1,054 822 708 531 337
in terms of milk with basic fat
content 2,155 2,007 1,824 1,737 1,346 1,198 1,239 1,089 851 733 554 353
including by grade:
– prime grade 7. 6 4.4 1.223 1.7 1.0 0.6 1.6 2.3 0.8 1.6 0.7 13.7
specic weight, % 0.4 0.2 0.1 0.1 0.1 0.1 0.1 0.2 0.1 0.2 0.1 3.9
– grade I 521 341 238.9 205 119 108 110 136 102 586 436 272
specic weight, % 24.2 17.0 13.1 11.8 8.9 9.0 8.9 12.4 12.0 79.9 78.7 77.1
– grade II 1,573 1,508 1,507 1,452 1,163 1,028 1,081 904 708 135 108 67
specic weight, % 73.0 75.1 82.6 83.6 86.4 85.8 87.2 83.0 83.2 18.4 19.6 19.0

Bal-Prylypko et al.
Scientific Horizons, 2023, Vol. 27, No. 1
147
Indicators 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Undergrade 55 154 76.9 79 63 61 46 47 40 10.8 9.1 0.1
specic weight, % 2.5 7.7 4.2 4.5 4.7 5.1 3.7 4.3 4.8 1.5 1.6 0.0
Share in purchased milk, %
– fat 3.5 3.49 3.5 3.48 3.49 3.51 3.51 3.51 3.52 3.52 3.54 3.56
– protein x x x 2.93 2.92 2.93 2.95 2.96 2.94 2.96 2.94 2.96
Source: calculated by the authors of this study based on data from State Statistics Service of Ukraine (n.d.),
Yu.Lupenkoetal.(2023)
It is much more difcult to bring milk from private
households to a high quality, as the conditions of cows
in such farms and the milking process do not always en-
sure that raw milk is of a high quality. In some cases,
contamination of milk with microorganisms can occur
even during milking due to non-compliance with san-
itary standards. All this leads to contamination of milk
with undesirable microora, and due to imperfect pro-
curement and logistics, milk from the private sector does
not meet the requirements of regulatory documents. An
analysis of milk supply to processing companies shows
that in 10 months of 2022, extra grade milk was pro-
cessed 10% more than in 2021 (Fig.5). In other words,
in 2022, 46% of milk supplied by agricultural enter-
prises was extra grade milk. Thus, in 2022, the share of
extra grade milk produced by agricultural enterprises in
Ukraine increased by a greater percentage than in the
EU but did not reach their level.
Figure 5. Milk quality (fat and protein content) in the EU and Ukraine in 2019-2021 (by quarters)
Source: calculated by the authors of this study based on data from State Statistics Service of Ukraine (n.d.), Сlal.it (n.d.)
3
3.5
4
4.5
І ІІ III ІV І ІІ III ІV І ІІ III ІV
2019 2020 2021
EU fat content, %
protein content, %
І ІІ III ІV І ІІ III ІV І ІІ III ІV
2019 2020 2021
Ukraine
As noted earlier, Ukrainian standards are con-
siderably inferior to European ones. When it comes
to the quality of Ukrainian and European milk, these
parameters differ signicantly. Thus, fat content, pro-
tein, somatic cell count, and bacterial contamination in
Ukraine are considerably lower than in Europe (Table4).
Table 4. Main parameters of milk quality in Ukraine and Europe
Country Fat content, % Protein content, % SCC, cm³ Bacterial contamination, cm³
Ukraine 3.4 3.0 <400000 <100000
Europe 4.2 3.4 <249999 <24999
Source: DSTU 3662:2018 (2019)
It was found that the higher level of raw milk
prices in the world is conditioned by higher require-
ments for product quality – fat, protein, antibiotics,
somatic cell count, and bacterial contamination. Con-
sidering the European fat content of 4.2% and protein
content of 3.4%, the authors recalculated the purchase
prices for raw milk in Ukraine relative to the European
ones, using the methodology described below (CLAL.
it). The pricing of milk and dairy products should fac-
tor in the quality of the product (fat and protein con-
tent as 40:60), which is incentivised by premiums and
surcharges.
=󰇡
 0.6 + 
 0.4󰇢
, (1)
where PEU is the average protein content for EU countries,
%; PUA is the protein content in Ukraine, %; FEU is the aver-
age fat content for EU countries, %; FUA is the fat content in
Ukraine, %; Prf – the factual price of milk in Ukraine, EUR/t.
Comparing the raw milk purchase prices recalcu-
lated to the basic indicators, it was found that their fac-
tual level in Ukraine (43.47EUR/t in October 2023 in
European countries, against 39EUR/t in Ukraine for the
corresponding period) is lower than in most European
countries (Fig.6).
Table 3. Continued

Developing dairy farming and improving product quality
Scientific Horizons, 2023, Vol. 27, No. 1
148
Figure 6. Average milk price in the EU and Ukraine (converted to EU milk quality), EUR/t
Source: calculated by the authors of this study based on data from State Statistics Service of Ukraine (n.d.), Сlal.it (n.d.)
35.23
35.22
34.62
33.62
33.02
32.5
32.78
33.11
33.95
35.07
35.33
35.39
34.87
34.97
35.17
35.52
35.72
35.77
35.99
36.41
37.29
38.68
40.03
41.24
41.81
42.5
43.92
46.23
47.99
49.4
51.08
52.37
54.53
56.64
37.1
36.8
33.7
31.9
30.6
29.1
28.2
27.7
29.0
30.6
31.6
32.1
32.0
32.3
33.0
32.6
32.0
31.6
32.3
34.2
36.3
40.3
40.5
39.2
37.6
36.2
33.4
35.2
37.0
36.7
34.1
30.6
32.4
35.8
15
20
25
30
35
40
45
50
55
60
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
2020 2021 2022
€/t
EU Ukraine (recalculated)
Thus, at the end of 2022, purchase prices for milk in
Ukraine were 40% lower than in the EU and 11% lower
than in 2021. Ukraine’s dairy market is under pressure
from a range of factors that are holding back milk price
growth: declining domestic consumer demand; rising
unemployment, which indicates a decline in dairy con-
sumption in the near future; rising production costs
due to the destruction of the energy system by Russia’s
shelling; depreciation of the hryvnia, etc. (Association
of milk producers in Ukraine, n.d.).
There are numerous discussions among scientists
about the readiness of Ukrainian milk producers to
comply with European standards for fat (4%) and pro-
tein (3.4%) in milk. During the Soviet era, the only basic
indicator of milk quality was fat content. The protein
content indicator appeared a little later due to the lack
of animal protein in the diet. Ukraine has the lowest
basic indicators of fat and protein among post-Soviet
countries. These requirements are not only consumer
but also economic in nature. Thus, Israel does not ac-
cept Ukrainian milk for processing, even extra grade
milk. The authors of the present study believe that
achieving these standards will enable Ukrainian pro-
ducers to join the so-called “elite” of milk producers.
Analysts have different opinions on compliance
with standards. Y.Sivovet al.(2020) note the need to
comply with such standards, but note that as a result
of their application, the protability of an average
dairy farm may decrease by 12-14%. M. Bugai(2020)
believes that Ukrainian dairy producers have all the
capacities to produce products according to European
standards without fantastic investments. An equally
essential issue in the dairy industry is the dictates of
retailers towards dairy producers. J. Britt et al. (2018)
predict an increase in production and safety in the
dairy industry through consolidation, modernisation,
and specialisation. It is noted that large dairy farms
will increase the level of automation to reduce costs,
which will affect their protability. The authors envis-
age a transition from the usual export of surplus to an
increase in the production of value-added products
that will be adapted to particular tastes and traditions.
O. Shpychaketal.(2022) believe that to ensure the pro-
duction and sale of high-quality milk, it is necessary to
reorganise its production by concentrating the number
of cows in farms. Government support mechanisms can
play a vital role in this regard.
According to L. Tulush, Head of the Analytical
Department of the Union of Dairy Enterprises of
Ukraine(2021), state support measures, entrepreneurs’
efforts and consideration of international practices will
help ensure food security in Ukraine, reduce dairy im-
ports, and introduce advanced resource-saving tech-
nologies to produce high-quality dairy products. If the
quality of their products is maintained, domestic pro-
ducers will be able to expand their sales geography by
developing new international markets.
The state should facilitate the implementation of
nancial incentives for the development of the dairy in-
dustry to stabilise milk production. There is a shortage
of raw milk in Ukraine, which prompts processing com-
panies to consider various options for maximising their
capacity utilisation. Otherwise, Ukraine will become
more dependent on dairy imports, which will increase
threats to food security. Thus, negative processes in
the industry will become irreversible if the state does
not intervene in this situation in the coming years
( Tulush, 2021). N. Shyian and V. Kolosha(2020) also
note that with the joint efforts of the state, milk pro-
ducers, and processors, the Ukrainian dairy market has a
real potential to run a protable business and become
a powerful exporter of dairy products to the European
market and other countries. The ndings of the pres-
ent study and the conclusions of the above-mentioned

Bal-Prylypko et al.
Scientific Horizons, 2023, Vol. 27, No. 1
149
authors suggest that, given the strategic course towards
European integration, the dairy industry of Ukraine
should be guided by European product quality stand-
ards. A vital factor in fullling the purpose of the strat-
egy is to improve the quality of the raw material base
through concentration of livestock and joint efforts of
the state, milk producers, and processors.
CONCLUSIONS
The conducted study suggests that, since Ukraine has
been granted EU candidate status, the issue of the qual-
ity of domestic products is of particular importance. Giv-
en that European standards for raw milk procurement
are several orders of magnitude higher than Ukrainian
standards, it is necessary to harmonise state standards
for these products with international requirements and
introduce certain measures to improve the culture of
milk production, delivery, and marketing to dairy pro-
cessing enterprises.
An equally urgent issue is private households, which
should be transformed into family dairy farms (cooper-
atives) to preserve the livestock, because second-grade
raw milk, which is mostly produced by these farms, can-
not be used to produce export-oriented products, which
is 75% of all milk produced in Ukraine. Statistics show
that more than half of the world’s milk is processed by
cooperatives, as this business model best serves the in-
terests of raw milk producers and the processing industry.
It was found that the competitiveness of dairy
products depends on the quality of the raw material
base. Strict quality requirements for raw milk limit the
ability of most Ukrainian dairy processing companies
to enter European markets. Therefore, government
mechanisms of inuence should be aimed at support-
ing Ukrainian producers and promoting the formation
of specialised milk cooperatives. The authors of this
study propose to consider the quality parameters of
products when forming the price of milk of Ukrainian
producers using surcharges and extra charges to bal-
ance it against the basic indicators of raw milk quality
in European countries. Comparing the raw milk pur-
chase prices recalculated to the basic indicators, it was
found that their factual level in Ukraine in October
2023 was 39.0 EUR/100 kg, and in European coun-
tries– 43.47 EUR/100kg. Thus, the price of milk in
Europe is 11.5% higher than the factual price offered
by Ukrainian producers, which is an incentive for them
to improve product quality and, consequently, generate
higher prots.
The analysis of the current state of dairy farming
suggests that to boost the dairy business, it is neces-
sary to increase state support for the industry. The fact
that the purchase price of milk from both agricultural
enterprises and households, which is supplied to dairy
processing plants, is almost three times lower than the
nal retail price is unacceptable. Therefore, the devel-
opment of the dairy industry in the long term is possi-
ble only if the interests of all market players – produc-
ers, processors, and the state – are considered and they
work closely together.
Further research will be aimed at a detailed analysis
of the set of factors that directly affect the selling price
of milk and substantiation of a fair distribution of the
price between producers, processors, and trade. In the
future, special attention should be paid to marketing
strategies and innovative capabilities of the dairy busi-
ness. Thus, the introduction of an effective mechanism
for implementing the proposed measures with govern-
ment support will be the driving force behind the ac-
celerated development of the dairy industry.
ACKNOWLEDGEMENTS
None.
CONFLICT OF INTEREST
The authors of this study declare no conict of interest.
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Scientific Horizons, 2023, Vol. 27, No. 1
151
Розвиток молочного скотарства та підвищення якості продукції
Лариса Вацлавівна Баль-Прилипко
Доктор технічних наук, професор
Національний університет біоресурсів і природокористування України
03041, вул. Героїв Оборони, 15, м. Київ, Україна
https://orcid.org/0000-0002-9489-8610
Людмила Михайлівна Березіна
Доктор економічних наук, професор
Полтавський державний аграрний університет
36003, вул. Сковороди, 1/3, м. Полтава, Україна
https://orcid.org/0000-0003-2843-5893
Людмила Михайлівна Степасюк
Кандидат економічних наук, доцент
Національний університет біоресурсів і природокористування України
03041, вул. Героїв Оборони, 15, м. Київ, Україна
https://orcid.org/0000-0002-7258-9243
Олена Олександрівна Чередніченко
Кандидат технічних наук, доцент
Національний університет біоресурсів і природокористування України
03041, вул. Героїв Оборони, 15, м. Київ, Україна
https://orcid.org/0000-0001-8908-4113
Анастасія Тарасівна Лялик
Кандидат технічних наук, асистент
Тернопільський національний технічний університет ім. Івана Пулюя
46001, вул. Руська, 56, м. Тернопіль, Україна
https://orcid.org/0000-0003-3013-1784
Анотація. Необхідність пошуку шляхів підвищення якісних характеристик молока як основи підвищення
конкурентоспроможності молочної продукції на світовому ринку зумовлює актуальність дослідження.
Молочна галузь України є однією з важливих у аграрному секторі економіки, так як забезпечує населення
країни життєво необхідними продуктами харчування. Мета дослідження – обґрунтувати напрями вирішення
організаційно-економічних проблем розвитку молочної галузі для задоволення потреб внутрішнього ринку
якісною молочною продукцією та збільшення експортного потенціалу. Дослідження проводилися з метою
виявлення основних причин трансформаційних змін, які відбулися в молочному скотарстві та окреслення
перспективних напрямків розвитку даної галузі в контексті підвищення якості продукції. У фокусі даного
дослідження – європейські та національні вимоги до якості молоко-сировини. При роботі з аналітичним
матеріалом використовувалися такі методи економічних досліджень: економіко-статистичний, порівняльного
аналізу, графічний, логічного узагальнення, системного пiдходу, системно-структурного аналізу, розрахунково-
конструктивний. У статті проаналізовано дані сільськогосподарських підприємств і господарств населення
України, які займаються виробництвом молока за 2010-2022 роки та здійснено перерахунок закупівельних цін
на молоко-сировину відносно європейських показників якості продукції. Результати проведеного дослідження
свідчать, що забезпечення конкурентоспроможності продукції молочної галузі залежить від якості молока.
Встановлено, що вона є вищою в європейських країнах, тому високі стандарти щодо якості молочної сировини
стають бар’єром входження на європейські ринки для більшості вітчизняних молокопереробних підприємств.
Відповідно, стратегія держави повинна орієнтуватися на збільшення виробництва молочної сировини
високої якості та зростання експортного потенціалу шляхом формування спеціалізованих кооперативів
із виробництва молока для молокопереробних підприємств. Практична значимість отриманих результатів
полягає в тому, що авторські рекомендації можуть бути використані сільськогосподарськими підприємствами
чи особистими господарствами населення в їхній пересічній діяльності
Ключові слова: молоко; якість молочної продукції; міжнародні стандарти; виробники продукції; ціна релізації