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Expensive buckwheat: What foods can go up in price due to coronavirus?

Author : Olena Holubeva

Source : 112 Ukraine

Due to excessive demand and limited stocks, food prices could become too high in Ukraine, experts say
23:21, 9 April 2020

Open source

The government banned the export of buckwheat from Ukraine. This step is fully justified, it will help to stop the price increase: due to excessive demand and limited stocks, cereal prices could become too high, experts say. 112.ua studied what the situation is with the availability of other food products in the country and whether one should expect an increase in prices for them.

Holy buckwheat

At an extraordinary meeting on April 2 the government decided temporarily to ban the export of buckwheat from Ukraine. “Given the available stocks, the decision to limit the export of buckwheat was the right step. There really were objective prerequisites for the price increase for this cereal. Even before the introduction of restrictions due to the threat of coronavirus in Ukraine, we predicted that buckwheat could rise in price because it was harvested in Ukraine less than in recent years, due to the reduction in the cultivated area for this crop. The excessive demand that began in connection with the introduction of coronavirus quarantine accelerated price increases. Under the influence of these factors, the price of buckwheat literally soared in several weeks," said deputy general director of Ukrainian Antimonopoly Committee (AMCU) Natalia Zaritska.

According to her, the fact that until recently, the main suppliers of buckwheat to Ukraine were Russia and Belarus added tension to the situation. These countries have banned the export of buckwheat. “Retailers tell us that they still have stocks of cereals in warehouses for 1-2 weeks and, as soon as they are exhausted, they will have to buy buckwheat from wholesalers at higher price. At this price, putting it on the shelves is not profitable: who will buy buckwheat at such a price in the store? And the AMCU may have questions to the shop chains," says Zaritska.

So most likely, until July 1, buckwheat will completely disappear from sale in most stores - wholesalers will hold valuable cereals, waiting for further development of events. It is clear that if the situation worsens later, they will be able to sell it at higher prices. But if everything works out, then they will not lose anything. The good shelf life of buckwheat allows you to keep it in the bins as much as you like.

What should Ukrainians do? Obviously: either eat up stocks made at the beginning of quarantine, or take advantage of the situation with the availability of products on store shelves by hiding buckwheat for a rainy day. Moreover, there is no critical situation with respect to other food cereals - the price tag and their availability on the shelves are still stable.

Bread and bakery products, pasta

Last week, the media reported disturbing news of rising prices for flour - the main raw material for bread and bakery products, pasta. The reason was an increase in food grain prices, which reached up after the dollar. “Indeed, the price of flour has risen sharply over the past month - only in March it increased by 20-25%. This gave rise to talk that there are reasons for raising bread prices in Ukraine. And if prices rose even more - indeed, they would have to be raised. However, the situation was stabilized due to interventions of the State Food Grain Corporation. The important point is that the growth of the dollar has stopped, which directly affects the price of grain, "said Yuri Tryndyuk, LLC (company owns 5 plants which bake bread and delivers it in Kyiv shops).

He emphasized that bakeries are now fully provided with flour, sugar, butter. There is no deficit in any of the items. At the same time, if flour prices continue to rise, bread prices could rise by 10-15%, Tryndyuk specified.

He noted that the situation can be balanced by a decrease in the consumption of bread and bakery products due to the fact that during quarantine people carefully plan to visit stores. "Many people have become more careful about food - if earlier most people got rid of the remnants of bread in a banal way, now they are most often using it," the source said. According to our own observations, we can only add that most of the acquaintances from the beginning of quarantine also began to bake bread at home.

What decision the authorities will make regarding flour is still unclear. However, wheat exports will not be limited so far. “We are not talking about restricting grain exports from Ukraine as a whole, in particular food wheat. Ukrainian traders have been taking self-restrictions on export volumes for 9 years in a row that they have never violated. We now have a similar memorandum, according to which during the grain year (ends in mid-summer), traders pledged to export no more than 20.2 million tons of old wheat without class division. I met with the Minister of Economic Development, Trade and Agriculture Igor Petrashko, and he confirmed that he will follow the Memorandum - additional restrictions will not be introduced ", - said president of the Ukrainian Grain Association Mykola Gorbachev.

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He noted that for Ukraine, which 40% foreign exchange earnings are generated from agricultural exports, the possibility of selling grain on foreign markets is extremely sensitive. "Why take unjustified steps and limit the export of raw materials, which is more than enough? And then ask for money on credit? In 2019, the country collected about 28 million tons of wheat, and we plan to export only 20.2 million tons. At the same time, domestic consumption for food needs does not exceed 4 million tons. Thus, on July 1 (before the harvesting campaign) we will have at least 3 million tons of transitional residues. There are grain and flour reserves in the State Reserve, according to my information, they also assured the government that if necessary, can come up with intervention, so there is no threat of shortage of these positions," said Gorbachev.

How the situation will develop further is a question. Interviewed experts believe that due to the abnormally warm winter, which did not allow the crops to get enough moisture, as well as the reduction in the area under crops, one can’t count on a record crop in Ukraine. In addition, it is not clear how the situation with coronavirus will develop in the regions and whether it will be possible to fully carry out the harvesting campaign, sowing autumn crops. Note that in the south of Russia, agricultural producers have already encountered difficulties in sowing due to restrictions introduced to combat Covid-19. Hundreds of people cannot get permission to go to work, and passes are not issued for agricultural machinery.

"As for the new crop, according to our forecasts, it will be slightly less than last year due to a slight reduction in the sown area of ​​24-25 million tons. But I want to emphasize - this is absolutely not critical for a country that consumes only 4 million tons of wheat per year for everything their needs (mainly the manufacture of bakery and confectionery, pasta)," Mykola Gorbachev announced the forecast.

Vegetables

The price of potatoes rose at the beginning of quarantine. To a large extent, this was facilitated by the decision to close food markets, says Natalia Zaritska. Prices for other vegetables have also risen. According to analysts at the Ukrainian Club of Agricultural Business, they has risen over the past two weeks of March: cabbage – by 86%, carrots – by 48%, beets – by 47%, potatoes – by 39%.

This mainly happened in connection with the decision of the authorities to close food markets (due to the threat of the spread of Covid-19). The entire load fell on large retail chains, which traditionally worked only with large suppliers. Markets were the fiefdom of small traders - therefore, in the supermarkets you could buy beautiful carrots and potatoes with a product label, but more expensive than in the market. “Small suppliers couldn’t make their way to supermarket shelves due to the terms of payment for the delivered product (stores return money with a delay), there are also requirements for the size of the minimum lot and the rhythm of their shipments. Networks preferred to work with large suppliers. Therefore, when markets closed, supermarkets became the only sources of products for consumers, which had a direct impact on the prices of vegetables, including the “borsch set.” With the markets opening, we expect a rollback in prices and stabilization of prices for vegetables," explained Natalia Zaritska.

In the future, the situation with potato prices may be affected by the restriction of their import supplies, if any. In particular, this year there were literally record-breaking potato deliveries from Russia and Belarus, Zaritska noted.

At the same time, prices for onions, which are mainly imported to Ukraine recently, will depend on the dollar exchange rate. “With the adoption of the law on agricultural land turnover (the document opened the agricultural land market, which was a condition for granting an IMF loan, - ed.), dollar exchange rate stabilized, which had a direct impact on the price of products that Ukraine imports. In particular, due to this, demand for onions fell at the beginning of the week. Until recently, we exported onions, but the price began to rise, and Ukraine began to import them. Now onions come from Poland and the Netherlands, and deliveries from Tajikistan are also expected. So the dollar exchange rate is very important," Zaritska emphasized.

Milk and dairy products

The situation with dairy products in Ukraine has always been ambiguous and difficult to explain in terms of logic. On the one hand, we have been witnessing a rapid decline in the number of dairy herds for more than ten years, and on the other hand, the purchase prices for milk not only do not grow, but also sag. According to the Association of Milk Producers, in March prices continued to decline, which affected the low-quality milk segment the most. And summer is coming - the season of the traditional decline in demand for dairy products, and prices (this usually happens in the purchase) will decrease even more.

You can try to explain the situation with a decrease in milk yields and the lack of rising prices for dairy raw materials, taking into account how many dairy products - ice cream, butter, various types of cheese - Ukrainian producers make using the replacement of milk fat with palm or hydrogenated fat. 112.ua has repeatedly described the problem: all that is needed to understand its scope is that only bottled drinking milk is not faked.

At the same time, one cannot ignore the fact that now the main countries - suppliers of vegetable fats, in particular Malaysia, are covered by coronavirus (more than 3 000 infected already). So, it’s hard to say how the situation will develop further and how it will affect the business of dairymen and confectioners and the prices of finished products.

Pork, poultry and eggs

"Pork and beef prices in early March rose by an average of 18% due to rush demand, but now they have rolled back. This was not dictated by objective factors, just intermediaries and traders wanted to take advantage of the situation and make money. The authorities drew attention to the situation – they introduced price monitoring and also connected the Antimonopoly Committee," Natalia Zaritska said.

According to the Ukrainian Meat Association, in particular, pork stocks in the country almost doubled. The stocks of frozen pig meat in warehouses as of the end of February amounted to 1.8 thousand tons, which is three times more than at the end of winter 2019.

It is also more than enough poultry meat in Ukraine. Due to the outbreak of bird flu and the closure of export markets, as of the end of February, stocks of chicken in Ukraine reached 47.4 thousand tons against 26.4 thousand tons in February 2019. "This led to a weakening in purchase prices for pork, which in some places dropped to a critical point," said Oleksandra Bondarska, head of the analytical department of the Ukrainian Meat Association.

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In other words, there are still no objective reasons for the rise in price for sausages.

Again, the price of chicken eggs remained low due to bird flu. "Recently, producers have been forced to sell eggs even below cost. This is due to outbreaks of bird flu at the beginning of the year, which is why egg exports to several countries were limited," Zaritska said. According to her, for this reason, even if the price rises due to the traditional increase in demand on the eve of Easter holidays, then not by much.

Lemon, ginger and garlic overtook buckwheat

At the same time, the products most traditionally considered to be the main support of the immune system - lemons, ginger and garlic - turned out to be the most sensitive in the situation with the imminent threat of coronavirus. “In the very first weeks of quarantine, lemons rose literally three times, ginger prices rose 3-5 times, and garlic went up significantly,” said Natalia Zaritska.

According to her, there are no hopes for stabilizing prices for these positions in the near future. In particular, Ukraine imports lemons from Turkey, which suspended their supplies to foreign markets. The last 7 years, Ukraine has been supplying garlic mainly from China.

Ukrainians will have to give money or console themselves with the fact that, according to doctors, the famous trio is good for strengthening immunity, but does not represent any exceptional importance, all the more completely powerless in the prevention or treatment of coronavirus. They can be replaced with other products.

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