The All-Ukrainian Bakers’ Association (VAP) and the Union of Millers of Ukraine In 2024, for the second year in a row, they refused to sign a memorandum with the Ministry of Agrarian Policy and Food and grain associations due to disregard for the interests and arguments of processors, said VAP head Alexander Taranenko in an interview with Interfax-Ukraine.
“A memorandum is a document for which no one bears legal responsibility for violating. In addition, the VAP and the Ukrainian Millers’ Union opposed the volumes specified in the memorandum (a limit on grain exports of 16.2 million tons), as this leads to the export of very large volumes of food grain from Ukraine, which significantly affects domestic bread prices,” he explained.
Taranenko emphasized that processing enterprises insist on distinguishing between food and feed grain when fixing grain export volumes. At the same time, they have nothing against the export of feed grain in any quantity, since Ukraine grows more than enough of it.
Speaking about food grain, the expert noted that in recent years, as a result of various events – climate change, military actions and economic situations – the quality of the grain harvest in Ukraine has significantly deteriorated.
“While in 2020, food wheat accounted for 57% of the harvest, in 2024 it will account for only 27%. Accordingly, the volume of grain suitable for processing is even smaller, because the aforementioned 57% and 27% include wheat of the first, second, and third grades. Not all third-grade wheat is suitable for processing into flour. This means that less than 20% of the total harvest in 2024 was suitable for processing into flour,” Taranenko stated.
According to him, these nuances are completely ignored by grain experts. At the beginning of the harvest, the first wave of exports to foreign markets includes a large amount of food wheat, which causes an increase in domestic bread prices.
If the authorities had taken certain measures, such as introducing export segmentation, forming domestic reserves, creating state reserves or financing their creation, the rise in bread prices would not have been so significant and sharp, the head of the industry association is convinced.
Taranenko recalled that the State Reserve, the Agrarian Fund, and the State Food and Grain Company had previously operated on this principle. They bought grain at reasonable prices during mass sales, stored it, processed it, and when prices rose sharply, they intervened in the market by putting a certain amount of flour up for sale and holding back price increases.
“This mechanism existed and worked quite well. It was abandoned because mice ate tens of thousands of tons of grain. In fact, this does not indicate the ineffectiveness of the mechanism, but rather insufficient control. The mechanism itself is capable of ensuring the stability of bread prices and sales,” the head of the VAP summed up.
Bakers' Association, Rising bread prices, state intervention
