Improving milk collection and processing systems is vital to further developing Ukraine’s agricultural sector. Eighty percent of milk in Ukraine is produced by small-scale producers who, in most cases, do not coordinate their efforts, which impacts the quantity and quality of milk production.

USAID’s AgroInvest project has addressed this problem by providing grants to agricultural service cooperatives to improve their processing systems. This activity is part of USAID's effort to accelerate and broaden economic recovery in Ukraine by promoting reforms that stimulate investments, increase production and improve processing, logistics and marketing in the agricultural sector.

Hospodar Pidhir'ya, a union of three agricultural service cooperatives with 1,000 members in Chernivtsi oblast, was the first to receive a USAID AgroInvest grant in Ocotber 2012. With this support, supplemented by funds from the local government and the private sector, the cooperative developed a dairy plant, Molochnyi Krai (Milk Land). They purchased state-of-the-art processing equipment, which allowed them to process to 12 tons of milk per shift, and created 17 new jobs.

Because it is a cooperative, Molochny Krai cuts out the “middlemen” between producers and consumers and reduces production costs, which not only allows the cooperative to pay its members more for the milk they provide, but also results in a more affordable price for consumers. Lower costs helped Molochnyi Krai win a contract to supply dairy products to local schools and hospitals. Today, the contract accounts for 50 percent of its dairy product sales.

"The fat content of my cows’ milk is quite high, over 4 percent. In the past, the cheese factory paid only for 'white' milk, and did not take into account the fat content," says Ivan Pylypko, a cooperative member from Stara Zhadova village. "I now supply my milk to Milk Land, our own dairy factory that is owned by the cooperative and works for its members. Since we are involved in the decision-making of the cooperative, we are now able to ensure that Milk Land pays for milk according to its fat content. This makes me very happy as I am now paid more for the high quality of milk my cows produce."

Cooperative members also host study tours at the facility to demonstrate milk quality control systems and cheese making processes for counterparts from other regions. With USAID AgroInvest support, Molochnyi Krai has become an example and a learning center for rural communities that plan to construct their own small-scale dairy plants.

The AgroInvest project runs from January 2011 to January 2016.