There is a real risk of bread shortages in Ukraine. Yuriy Duchenko, president of the All-Ukrainian Association of Bakers and director of the Kyiv Bread company, told Minfin about this. According to him, in June and July, the main bread producers in Ukraine worked either at a loss or at zero.
Read “Ministry of Finance” on Instagram: the main news about investments and finances
Price rise
“Flour prices have increased by 50% over the past few months and continue to rise. If in April we bought flour for 10 thousand per ton, now it costs 15 thousand, and by November the price is expected to be 16-16.2 thousand. Flour in the cost of bread is about 40%. Other raw materials (sugar, sunflower oil, etc.) have increased in price by more than 20% since the beginning of the year. Costs for electricity, logistics, packaging materials, etc. are growing. Therefore, it is necessary to raise bread prices by 15-20%. If this does not happen, many bakeries may simply stop and the country will experience shortages of bread. Already now, a number of enterprises are on the verge of stopping, some are switching to working in one shift,” says Duchenko.
According to him, the significant increase in flour prices is explained by the fact that there is a limited supply of second-class grain on the domestic market (and this is exactly what is used for flour for the baking industry). Many sellers are holding back grain in anticipation of better prices.
In addition, millers are incurring high costs due to power outages, although, for example, bakeries, which are considered critical infrastructure, had minimal power outages in July.
At the same time, bakers cannot raise bread prices adequately to the rise in raw material prices and the increase in their costs (most factories have an obligation in their contracts with retailers to revise prices by no more than 5% per month).
As a result, large cash gaps arise, and enterprises cannot pay their contractual obligations on time.