French dairy giant Danone is set to open its fifth Ukrainian agricultural co-operative in a row this year in a bid to tackle the challenge of securing milk supplies in the country.
In these cooperatives Danone unites private farmers and supplies them with institutional support and equipment. Another fifteen will follow next year.
“Ukraine has a milk crisis, producing less milk every year,” Dario Marchetti, CEO of Danone Ukraine, said. Due to the milk deficit Danone Ukraine recently stopped the production of less profitable dairy products, like milk.
Eighty per cent of Ukrainian milk is produced by private farmers that own on average 1.5 cows. In the future, with 20 agricultural co-operatives, spread over five Ukrainian regions, Danone strives to unite 1,000 farmers and improve the quality and quantity of their production. In the longer run Danone wants to move these co-operatives into small farms. A ‘demo farm’, planned to be set up next year, will serve as an example for these co-operatives.
Danone also wants to stimulate the growth of big farms by providing them with financial support. At current interest rates of 20 to 30%, farmers are not investing. Other barriers for investment are the unpredictability of milk prices and government policy.
However, despite the milk deficit, Marchetti is positive. “Ukrainians consume 14 kilos of milk per year, five of which is unpacked. In the Netherlands the consumption is for instance 22 kilos. Imagine the opportunity to grow here.”