The cost of bread produced by individual entrepreneurs has increased by approximately 25% since the blackout began, and poppy seed rolls by 40% due to the need to maintain generators, purchase fuel, and cover logistics costs, according to Nina Yuzhanina (European Solidarity), a member of the Verkhovna Rada Committee on Finance, Tax and Customs Policy.
She said that she occasionally buys bread outside the city — in small private bakeries that operate as individual entrepreneurs.
“When there is electricity, production is stable and prices are predictable. When there is no electricity, work is done exclusively on generators with constant fuel costs. The result is already noticeable: the cost of bread has increased by about 25%, and poppy seed rolls by almost 40%. The reasons are obvious: fuel, generator maintenance, and logistics disruptions. This is not a question of excess profits — it is an attempt to cover costs and survive,” she wrote on Telegram.
Yuzhanina stressed that with such an increase in prices for bakery products, it will be difficult to maintain sales volumes, as the additional costs will not disappear.
“There are more than 4,000 sole proprietors (groups 1-3) in Ukraine who are engaged in baking bread. And if, against this backdrop, mandatory VAT payments are introduced for them, it will not only be a blow to small businesses, but a real tax blackout — with the risk of production closures and further price increases,” the parliamentarian stressed.
As reported, the prospect of introducing mandatory VAT payments for sole proprietors in groups 1-3 is currently being considered as part of the adaptation of Ukrainian legislation to EU standards and the National Revenue Strategy, which provides for the gradual abolition of the simplified system in its current form. The main risk lies in a significant increase in the administrative burden: entrepreneurs will have to keep accounting records, register tax invoices, and add +20% to the cost of their goods or services, which may make small businesses uncompetitive compared to large players. Although this decision is aimed at de-shadowing the economy and combating schemes for the use of sole proprietorships by large businesses, for the actual self-employed population, such a step could become a critical financial barrier.
Argon Food, a company specializing in the production of bakery products and the storage and transportation of other food products, has installed a solar power plant with a peak capacity of 114 kW, according to Andriy Ocheretny, deputy mayor of Vinnytsia, on Facebook.
“A solar power plant with a peak capacity of 114 kW was installed on the roof of the enterprise. The station was put into operation at the end of May, and since then, thanks to its operation, the enterprise has covered almost all of its electricity needs,” he wrote on Facebook.
According to Ocheretny, the company has become one of the applicants for participation in the Procedure for partial compensation of expenses for the purchase of equipment used for the production of electricity from renewable energy sources within the city program.
“In the context of blackouts, the transition to ”green” energy is the path to energy independence. This strategic decision helps businesses reduce production costs, retain staff, and create new jobs, while contributing to the sustainable development of the community,” concluded the deputy mayor of Vinnytsia.
The Ukrainian baking industry operates in a highly competitive environment with low profitability, according to Oleksandr Taranenko, president of the All-Ukrainian Bakers Association.
“We bakers only know about 10% profitability from stories. Most companies operate with a margin of 5%, and sometimes even lower. At the same time, costs are constantly rising. For example, the rise in electricity prices has added 1% to the cost price, and this increase cannot be immediately passed on to the price – it takes months,” he said.
According to him, this is why forecasts of a 15-20% increase in the price of mass-market bread are not related to manufacturers’ desire to increase profits, but to the need to compensate for increased costs.
“Bakers are forced to raise prices. This is not an attempt to make a profit, but an attempt to survive. When production costs rise and prices cannot be changed quickly, companies simply go into the red,” Taranenko emphasized.
Baked goods will continue to rise in price in 2025. If they increased by 20% in 2024, then in 2025 the increase will be another 15-20%, said Yuriy Duchenko, director of Kyiv Bread LLC.
“We see a trend toward higher prices for products in 2025. This is understandable because costs have risen, primarily for raw materials, i.e., flour, energy, and wages. By the end of the year, I think there will be steps toward price increases. By the end of the year, it (the price increase – IF-U) will be 15-20%,“ he said during the ”Hlib.ua” conference in Kyiv on Thursday.
Duchenko stressed that most bakers are currently operating at the break-even point, and some are even in the red.
Assessing the prospects and trends in the industry in 2025, the director of Kyiv Khleb noted an increase in demand for simple bread recipes in tons. At the same time, there is a decline in sales of wheat, bakery, and pastry products. In other words, according to him, demand for more marginal products in tons is decreasing.
Among the main problems in the industry, the expert named the drain of working capital from processing enterprises due to low production profitability, energy dependence, a decline in the purchasing power of Ukrainians, logistical difficulties, export restrictions, and the shadow market, which has reached 40-50%.
“It cannot be said that our market is completely in the shadows. We are talking about working under a simplified taxation system and certain wage payment schemes. Therefore, products that are manufactured and sold at prices 20% lower than the market price are serious competition in a market where there are about 4,000 manufacturers producing and selling the same product, which costs money and for which the buyer votes with their wallet. There is very strong competition among manufacturers,” Duchenko emphasized.
According to the director of Kyiv Khleb, the situation can be resolved through the automation of industrial production, the use of innovative technologies, in particular artificial intelligence, a change in distribution channels, the development of fast food and street food, franchising schemes, and a focus on fresh, healthy bread.
The All-Ukrainian Bakers Association (VAP) expects bread prices in the country to rise by 20% by the end of 2025, but this is unlikely to undermine the budget of Ukrainian families, its head Oleksandr Taranenko said in an interview with the Interfax-Ukraine news agency.
“I wouldn’t be surprised if that happens. Everything is moving in that direction,” he said.
“I won’t be surprised if that happens. Everything is heading in that direction,” he said.
Speaking about the 20% prospect of bread price increases, Taranenko said that the current wholesale price of 1 kg of bread from a bakery is slightly more than 40 hryvnia. At the same time, supermarkets’ margins on bread, using various marketing mechanisms, sometimes reach 30%, although by law they should not exceed 10%.
“Let’s not take domestic statistics into account — they do not reflect reality due to the existence of a ‘shadow’ market and other nuances. Objectively, Ukrainians currently consume 150-200 g of bread per day, or about 5 kg per month. Thus, every month, Ukrainian citizens spend 200-210 UAH on bread. If the price increases by 20% per year, people will spend 40 UAH more on bread every month. Yes, for our pensioners and other low-income groups, 40 hryvnia is a lot of money. However, to say that 40 hryvnia per month will undermine the budget of a Ukrainian family would probably be an exaggeration,” the expert stressed.
Among the reasons for the rise in bread prices, he cited increases in the prices of all components of the product—flour, yeast, fats, and sugar. Added to these are the cost of electricity, logistics, and the state’s requirement for enterprises that are critical to the economy and have the right to reserve personnel to raise salaries to 20,000 hryvnia.
“After taxes, people will receive 16,000 hryvnia. Previously, the average salary in our business was 13-15-16 thousand hryvnia, regardless of the enterprise. You must agree that this is not a high salary. But when someone says that bakers are getting rich, this is not the case at all. A salary increase of even 20-30% is a significant increase in production costs, while we are unable to increase our income,” the expert explained, adding that the profitability of the bread business is currently slightly above zero, and for some types of bread, it is below zero.
Taranenko cited State Statistics Service data, according to which there are over 3,000 registered bread producers in Ukraine.
“Let’s say that not all of them are currently operating for various reasons, but even if only 2,000 of them are operating, it is nonsense to imagine that they have all conspired to make excessive profits,” said the head of the VPP, rejecting the idea of an industry conspiracy to raise bread prices in Ukraine.
Ukraine since the beginning of the 2019/2020 marketing year (MY, July-June) has reduced production of bread and bakery goods by 12.3%, and in March this year compared to March 2019 by 13.8%, the UkrAgroConsult analytical agency said on its website.
According to the agency, production of flour since the beginning of the current MY has decreased by 3.1%, and in March this year from March of the past year by 8.8%.
UkrAgroConsult noted that in March production of bran also decreased by 8.3%, and feed by 6.1%.
