Production may be halted due to soaring flour and manufacturing costs, the head of the country’s bakers’ association has warned
Ukraine is running the risk of facing a deficit of bread, the president of the All-Ukrainian Association of Bakers, Yury Duchenko, has told a local news outlet, citing soaring production cost and energy supply issues as key reasons.
According to Duchenko, the country’s major producers of bread and baked goods operated at a loss or without profit in June and July, having suffered a 50% surge in prices for flour in recent months.
The industry expert emphasized that flour purchases account for nearly 40% of the cost of the end product, adding that prices for other ingredients like sugar and sunflower oil have also increased by at least 20% since the beginning of the year.
“Thus, it is necessary to raise retail prices for bread by 15-20%,” Duchenko said, as cited by the Minfin news website, stressing that many bakeries could halt production due to the rising costs, inevitably prompting nationwide bread shortages.
“A number of enterprises are already on the verge of shutdown; some are switching to working only one shift,” he added.
Prices for B-grade flour, which is the most widely used in bread production, have been surging, as many sellers have opted to hold onto grain in anticipation of better prices, the expert said, adding that flour millers have also faced higher costs due to power outages.
He stressed that bakers cannot raise bread prices in line with rising production costs, as most factories have an obligation to increase prices by no more than 5% per month due to their contracts with retail chains.
Ranked among the world’s ten biggest producers of grain, Ukraine has been facing major energy supply challenges, reportedly caused by Russian airstrikes targeting the country’s power infrastructure. Earlier this year, Moscow ramped up strikes against Ukrainian power generation facilities in response to Kiev’s attempts to damage Russian oil refineries and storage units using long-range kamikaze drones. Ukraine has been imposing rolling blackouts nationwide to address the growing shortage of generation capacity.
In June, Duchenko warned that bread prices in Ukraine could surge by up to 30%. He stressed that a number of enterprises in the sector had shut down despite the government’s decision to give them the status of critical infrastructure, which means they are never disconnected from the power grid. He added that some bakeries could switch to electric generators, but this primarily affects the stability of operation and pricing.
