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%.
One of the largest producers of bread in Ukraine opens EUR15 mln plant near Kyiv
KYIV. Nov 27 (Interfax-Ukraine) – Khlibni Investytsii Holding LLC, one of the largest producers of bread and bakery goods in Ukraine, has opened the Chanta Mount plant for production of frozen bakery products in the village of Novi Petrivtsi near Kyiv. According to a report on the company’s website, at the initial stage the investment in the project amounted to EUR15 million, after putting into operation all the necessary capacities it will exceed EUR25 million.
“Even today Chanta can produce almost 30 tonnes of ciabatta, French baguettes and other artisan breads per day. After installing additional lines, the capacity will increase to 90 tonnes per day. Thus, Chanta Mount has become one of the largest companies of such specialization in Europe,” the report says.
“We plan to sell 50% of our products in Ukraine, and the rest to sell for exports. We have a very powerful R&D department, which will develop the most interesting recipes for customers,” company founder Yuriy Tryndiuk said.
The report says the main buyers of these types of semi-finished products are bakeries in supermarkets and trade centers, mini-bakeries, fuel filling stations, the HoReCa sector, and the service of food delivery to offices.
Khlibni Investytsii Holding assesses its share in the Ukrainian market of bakery products at 8%, ranks third among the largest bread companies. It produces about 132,000 tonnes of goods per year.
