Bread prices are likely to rise: what market participants say

Yuriy Duchenko, president of the All-Ukrainian Association of Bakers and director of Kyiv Khlib, recently spoke about the risks of bread shortages and possible price increases. UNN has collected information about the situation on the market.

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According to Duchenko, in June and July, the main bread producers in Ukraine either lost money or lost money.

"Flour prices have increased by 50% over the past few months and continue to rise. If in April we bought flour for 10 thousand per ton, now it costs 15 thousand, and by November the price is expected to reach 16-16.2 thousand. Flour accounts for about 40% of the cost of bread. Other raw materials (sugar, sunflower oil, etc.) have risen in price by more than 20% since the beginning of the year. The costs of electricity, logistics, packaging materials, etc. are also rising. Therefore, it is necessary to raise bread prices by 15-20%. If this does not happen, many bakeries may simply shut down, and the country will face bread shortages. Already, a number of companies are on the verge of shutting down, some are switching to a one-shift operation," says Duchenko.

According to him, the significant rise in flour prices is due to the limited supply of second-class grain on the domestic market (which is what is used for flour for the bakery industry). Many sellers are holding onto grain in anticipation of more favorable prices.

In addition, flour mills are incurring high costs due to power outages, although, for example, bakeries that are critical infrastructure experienced minimal power outages in July.

At the same time, bakers are unable to raise bread prices adequately to meet rising raw material prices and their increased costs. As a result, large cash gaps arise, and companies are unable to pay their contractual obligations on time.

He also added that the price of products could rise as early as this month, and that disruptions in the supply of bakery products could begin in September if the situation is not remedied.

Svitlana Cheremisina, a researcher at the Institute of Agrarian Economics, said in a comment to Channel 24 that the entire list of grain processing products has experienced a slight rise in price over the summer.

At the same time, wheat bread made from high-grade flour went up to UAH 46.46 per kilogram (+1.3%), wheat bread made from first-grade flour to UAH 37.09 per kilogram (+0.9%), and rye bread to UAH 38.37 per kilogram (+1.1%). The price of a loaf of bread increased by 1.5%, from UAH 23.63 per kilogram to UAH 23.98 per kilogram.

He adds that the rising cost of electricity will support price increases.

"The rise in electricity prices will have a significant impact on the price dynamics of the entire list of bakery products. In addition to this objective factor, the rise in prices for raw materials used in the production process will also affect the price of bakery products," explained Cheremisina.

It should be added that since the beginning of 2024, the purchase price for 2nd class wheat has increased by 47.4% - from UAH 5,700 per ton to UAH 8,401 per ton, and for 3rd class wheat - by 37.6% - to UAH 8,191 per ton. Rye prices increased by 49.1%, from UAH 3,688 per ton to UAH 5,500 per ton. Flour prices rose by 2.5% to UAH 15.95 per kilogram.