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Why groceries to keep getting more expensive in 2022?

Author : Olena Holubeva

Source : 112 Ukraine

In 2022, even more Ukrainians will not be able to afford decent nutrition
12:00, 9 December 2021

Open source

The rapid rise in food prices that began this year will continue in the next: prices for lard, meat, milk, sunflower and butter, cereals, borscht vegetables, and even "vodka" are expected to rise.

The prices are pushed up by the unprecedentedly high export of grain and oil from Ukraine. Food is taken to countries whose residents are willing to pay much more for quality food than Ukrainians. It also influences the increase in prices for energy resources, due to which the cost of storage has increased - in elevators, in vegetable stores, and refrigerators.

Related: Kyiv is at 88th place in the rating of most expensive cities for living

Golden porridge

This year, a significant increase in prices for cereals was recorded in Ukraine. On average, producer prices rose 6.8%. The most dynamically growing prices were for corn grits (12.3%), buckwheat (10%), barley (6.4%), peas (4%).

The largest price jump was observed in November: compared to November 2020, all cereals rose in price by an average of 22.5%. In particular, barley groats - by 33%, corn - by 26.3%, peas by 22.1%, wheat by 15.8%, and buckwheat - by as much as 194.2%. As of November 20, the selling price of a kilogram of buckwheat groats reached 1,6 USD.

"The growth of wholesale and retail prices for cereals is accompanied, first of all, by an increase in prices for cereals and leguminous crops. Producer selling prices for the year increased by 16-19%. Inflation, which has reached 6.5% since the beginning of the year. The growth of electricity tariffs, water, gas for enterprises. Since January, tariffs for electricity have increased by 36.6%, and for water supply and sanitation - by 10.9% and 17.3%, respectively. Food producers were forced to include the rise in utility bills in the cost of goods There was also an increase in production costs, in particular for payment for work," Anush Balyan, Academician, Vice-President of NAAS, emphasized.

According to her, despite the fact that the gross grain harvest is already almost 15% more than last year, and according to the latest forecasts, the production of grain and leguminous crops in Ukraine in the 2021/2022 marketing year has already reached 75.6 million tons (16 % more than last year), a decline in prices for cereals is not predicted.

"In 2022, prices for buckwheat are expected to rise by 15-20% - the cost will exceed 2,40 USD / kg, for peas - 10-15% (will exceed 0,9 USD / kg), for corn grits - 10-15% (will exceed 0,75 USD / kg), barley - by 12-14% (will exceed 0,7 USD / kg), wheat - by 10-15% (will exceed 0,75 USD / kg)."

Bread becomes a delicacy

Bread prices continue to rise in Ukraine this year. In comparison with the prices of the last year, the price for bread made of premium flour increased by 21.7% to 1,2 USD / kg.

Bread from flour of I grade - by 22.1%, (up to 0,9 USD / kg). Rye bread and rye-wheat bread - by 22.2% (up to 0,9 USD / kg). Baton - by 20.7 (up to 0,6 USD for 0.5 kg).

Exports of grain and leguminous crops from Ukraine have already exceeded 26.08 million tons, which is 3.78 million tons more than in the same period last year. As of December 2, the price of second-class wheat in Ukraine reached 360 USD / t (against the price in October 2020 of 275 USD / t). Part of wheat in the cost of flour is 70-80%.

Related: Kyiv transport to become more expensive, - Mayor

The granary of Europe, with its own record harvest, has to import flour. Despite the fact that the export of Ukrainian wheat flour in 2020/2021 MY decreased significantly, the import of the product into the country reached record levels. In the period from July to February, 12.900 tons of flour were imported to Ukraine, which is 5.3 times higher than the same indicator of the previous season (2.400 tons).

Every year Ukrainians can afford less and less bakery products. The capacity of the domestic market or the consumption fund for grain products this year is estimated at 4.034 million tons, while in 2020 - at 6.14 million tons. Over 20 years, the market capacity has decreased by a third. Consumption of bread products per Ukrainian has decreased from 124.9 kg to 96.6 kg in 2020, says Anush Balyan.

Expensive milk

After a long period of relative stability, fresh chilled milk started to grow for the first time on store shelves. As of November 1, the wholesale selling price for milk was 0,9 USD / liter, which is 13.5% more compared to the price in January and 15.5% higher than the price of October 2020. All dairy products are becoming more expensive: in comparison with prices in October 2020, the price of soft cheese increased by 11.1% to 120.22 UAH / kg, sour cream with a fat content of 15% - by 16.5% to 2,7 USD / kg.

The most significant rise in prices was demonstrated by butter - this year the price for it is the highest in the last five years. During January - October alone, consumer prices for butter increased from 10 USD / kg to 11 USD / kg. Compared to the price in October last year, the current price tag is 12.6% higher.

In 2022, due to the rise in energy prices, the rise in prices for milk and dairy products will continue. The cost of milk is growing due to the rise in prices for feed, diesel fuel, electricity, due to the devaluation of the hryvnia.

Also, the situation in the dairy industry is influenced by a reduction in the number of dairy cattle and a decrease in milk production. The number of cattle in Ukraine as of November 1 decreased to 3.03 million heads, which is 6.7% less than last year, in particular cows - 1.64 million heads (minus 6.1%). This is disastrously small, given that in the first years of independence, Ukraine had 25 million head of cattle. The volume of milk production in January-October amounted to 7.52 million tons, which is 6% less than the same period last year.

Related: Eggs, bread, sugar are new black caviar: What will happen to food prices in Ukraine?

Due to high prices for milk, Ukrainians are reducing its presence in their diets. Per capita consumption has already dropped to 202 kg with a minimum norm of 340 kg, Anush Balyan notes.

Lard is more expensive than meat

The main national snack - lard - continues to rise rapidly. At the bazaars, they ask for at least 7,35 USD / kg, and "generals'" is sold for 12-13 USD / kg. The price of lard in Ukraine is already higher than that of varietal meat. In addition to the growth in lard, another alarming trend is observed - a decrease in its supply, which is explained by a change in the orientation of agricultural producers: now they prefer meat pigs, which are rapidly gaining weight.

“We have practically lost the Ukrainian white pig breed, and on German counters such meat and lard are twice as expensive as others,” says Anush Balyan.

This year Ukraine imports four times more lard than it produces. For 9 months, 6.500 tons of lard were produced (2% less than in 9 months of last year), 25,000 tons of lard were imported - of this volume, 14 thousand tons of lard from Poland.

“Thus, only 20% of the bacon on the shelves of Ukrainian stores is Ukrainian,” Anush Balyan summed up.

The NAAS Vice President says that in the future, prices for lard, as well as for pork, will depend on the purchasing power of the population, the supply of poultry meat, inflation, the exchange rate of the national currency, and the volume of production and imports of the product itself.

The price of pasta from soft wheat varieties also went up - over the year they added 21.5% in price (up to 0,8 USD / kg).

"The rise in prices for bread and bakery products is associated with an increase in prices for sugar and vegetable oil by 50% and wheat by 27-29%," says Balyan.

Related: UN reports record world food prices

According to her, it is optimistic until the end of the year that prices will rise by another 10%. But from 2022, bread will rise in price by 1-1.5% per month. "The main reason is a huge jump in gas prices for enterprises. Bakery is on the verge of survival. Gas prices for them have increased sevenfold," says the vice president of NAAS.

At the same time, the All-Ukrainian Association of Bakers has already warned that in the near future the quality of bread in Ukraine may deteriorate, as it will be baked from flour with reduced baking qualities. The main reason is the lack of grain for the production of high-quality flour. Due to the sharp rise in prices for wheat on the world market, its massive export is gaining momentum. Mainly exported food grain of the first and second classes, while in Ukraine there is forage - earlier it was used for livestock feed, but now it will have to grind flour from it.

Why is vodka getting more expensive?

This year, the minimum retail price for 0.5 liters of vodka with 40% strength is 3,29 USD. The average price on the shelf is 3,44 USD per 0.5 liter, and for the premium bottle – 5,7 USD.

In the direction of increasing the price of vodka will be influenced by the cost of energy resources and grain from which alcohol is made. Another factor in the rise in prices may be investments in the modernization of distilleries, the depreciation of fixed assets of which is about 70%, Anush Balyan notes. According to her, the sale of distilleries to private hands in itself will definitely affect the price tag of vodka products upward.

At the same time, table wines rose in price by 5% over 9 months of this year.

Related: Worldwide food prices are rising for fourth month in row - UN

At the same time, shortages and price increases for 2022 are not predicted for them. "Winemakers are adjusting prices not only to the climatic impacts on their business, but also to the cost of foreign lines on store shelves. They are also under pressure from the prices of fuel and electricity, the rise in the cost of logistics. In 2022, wine prices may additionally rise by 1-2 % and at the expense of auxiliary materials (bottle, cork, label)," says Anush Balyan.

Authorities intend to regulate trade margins

The authorities are trying to stabilize the situation by resorting to manual regulation. On the agenda is a return to marginal trade margins. This rule was in effect until 2017, but was canceled as a relic of the pre-Maidan times. Now the initiative is at the stage of a bill that has not yet been considered in the session hall. However, even if the bill is adopted, it will not help to achieve a significant reduction in prices, because they are growing not because of speculative markups of networks, but for objective economic reasons leading to higher costs.

There are also more radical methods - limiting the export of grain. By the way, the current government has already considered such an initiative in relation to sunflower oil. So far, the producers have managed to agree: the authorities agreed to their voluntary obligations to limit the volume of oil exports from the country.

 

 

 

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