Fluid milk production in Ukraine is expected to decline slightly in 2018 and 2019. Overall efficiency of the dairy sector is improving: dairy yields are growing while the number of dairy cows is decreasing. Households remain the major milk suppliers, providing raw materials for commodity dairy products. However, the share of household production as an input to industrial processing is on the decline. In 2017-2018, Ukraine was able to increase butter exports significantly, reacting to a high world market price. In the domestic market, exported butter is replaced with lower cost spreads and margarine. Exports of skimmed milk remain flat, depressed by the low world price. Domestic demand for dairy products is slowly recovering as a result of disposable income growth.