Recently in the Mykolaiv region, kamikaze drones hit tanks with the unrefined oil. Russian troops destroy and loot farms, kill animals... How does this affect the country’s economy and the rise in prices?
Since the beginning of the year, prices have risen by an average of 25%. Why? Because the war is still there, and logistics are disrupted. We are also experiencing an economic downturn: currently, the decrease in GDP is estimated at 30%, and by the end of the year, we may reach 35%.
I must emphasize that in the agrarian sector of the economy, as a result of the war, we suffered considerable losses, primarily due to the theft of grain [by Russians]. The value of the stolen goods is estimated at millions of dollars. However, we currently do not have such problems that would cause a shortage of certain products.
[Read our spring report on food security amid the Russian invasion: «We must sow to feed the whole Ukraine.» How the Lviv region is preparing for the sowing campaign]
We shouldn’t forget that some occupied territories were specialized in the cultivation of certain vegetables, fruits, and berries. Onions and watermelons, for instance, were grown in Kherson, cucumbers – in Zaporizhzhia. Therefore, the increase in their prices is quite logical.
I would like to emphasize that prices will still increase by 7-10%, no more. And there will be no shortage of products, so I do not advise creating a stir on the market.
We have examples not only of increase, but also of stabilization and reduction of prices. For example, we can now observe a decrease in the price of pork, while also the stabilisation in the price of poultry meat, which is consumed in our country by 52% of all meat products’ volume.
Are there problems with the food supply in the Lviv region while the war goes on?
Lviv region does not provide itself with certain types of products. We generally do not have problems with grain, but there is a problem with its quality. During this year’s harvest, we collected almost 1.5 million tons of it, but we do not have high-quality grain, so we are forced to buy it from other regions.
Why then do analysts record the price increase of wheat, despite the low rates of its sales?
We can already see how the price of grain is rising. This includes fodder, and for this reason, we will see an increase in prices not only for bakery products, but also for meat and dairy ones.
I will talk separately about the situation with bread. On October 10, when everyone started buying bread en masse, most likely the problem was with electricity and failures that occurred in its supply. In general, there is no problem with bread.
The only problem is the increase in the price of grain. And don’t forget, we also export it. Ukraine occupies 15% of grain exports on the world market. And flour stocks at bakery enterprises are already running out, so we will soon feel these changes. Under the worst conditions, the cost of bread can increase by 50%, and all this is due to a significant increase in the price of flour, electricity, fuel, and logistics in general.
Read also: «We don’t produce anything but bread,» or why the food industry is problematic in the Lviv region
Over the past 10 years, the price of bread has risen by 5-10% every November. It is possible that the same situation will happen this year. I believe that a loaf of bread, which currently costs more than 20 hryvnias, will now increase in price to 30 hryvnias.
What are the reasons for the rise in egg prices, what is it related to, and what should we expect?
Regarding the increase in egg prices: there is a seasonal situation that we observe every year. But in 2022, a decrease in their production was added to the seasonality factor. Some poultry farms are located in the danger zone, in particular in the occupied territory, or close to hostilities.
Large complexes, which had a serious share in the production of eggs, are now resuming work. But there are other factors influencing the growth of the price of eggs: the increase in the price of electricity and energy carriers, in the price of compound feed. In short, there are always those who speculate and those who make money...
And what is the situation with buckwheat: do we have a good crop, and should we be prepared for a jump in prices?
The real speculation was when buckwheat cost 100 hryvnias. This year’s harvest is still in progress. Taking into account the data of the Ministry of Agrarian Policy, we expect more than 100 thousand tons. If this buckwheat is processed, we will have 50-60 thousand tons for consumption.
Currently, the price of buckwheat has decreased significantly and can range from 60 to 70 hryvnias. But you won’t be able to buy it at the former prices.
How much will the oil cost?
Oil prices have now stabilized, but a 5-7% increase is possible due to the complication of logistics processes. This is the impact of war. But if the manufacturing companies do not suffer serious losses, then I believe that we have sufficient oil reserves.
What went wrong this year? i mean, the prices for onions and carrots are currently high. At the same time, the prices for beets and potatoes are quite acceptable. What is it related to?
We have problems with several of their species, including onions. It is problematic to grow them because you have to follow the appropriate technology. This is mainly done by the private sector. The lack of onions in the Lviv region is compensated by imports.
Still, we can have problems with carrots not only in the Lviv region but in Ukraine in general. It is poorly stored, and therefore not prepared for long-term storage in the private sector.
In general, we have smaller harvests than in previous years. This year, many households did not start growing vegetable gardens due to economic conditions, the impossibility of carrying out relevant work and insufficient financial resources.
In the Lviv region, potatoes is what we have in abundance. The one that is collected in Ukraine, in particular in the territory of our region, is used first for consumption. We consume only 27% from what we harvested, while the rest is used for livestock feed. A certain amount even rots due to improper storage or lack of storage space.
There is a tendency to switch to vegetable milk, but most Ukrainians still prefer that of animal origin. What prices should we expect for dairy products?
Milk production is decreasing every year. These are the consequences of an annual reduction of 5-7% per year in the number of cattle. And this trend continues. In the winter period, the productivity of animals also decreases, so, accordingly, we have a decrease in the volume of milk production.
Is there a possible shortage of other goods and products, such as salt or sugar?
There should not be any problems with sugar, because the Lviv region has the most powerful enterprise in Ukraine for its production – the Radekhiv Sugar Factory. In addition, in recent years, we have observed a clear trend towards a decrease in the consumption of this product.
More than a million tons of sugar will be produced this year. And that’s enough. In addition, last year’s stocks are still left. It’s easy to provide sugar for the number of people who live in Ukraine today. The only question is who will be the owner of this sugar and who will determine its price. Here, everything will depend on how loyal this owner, this price maker will be to consumers.
Now, salt in Ukraine is usually imported – from Turkey and Poland. It is of a slightly different quality than what we are used to. But the season of canning and pickling in our country is actually over, so the need for salt is decreasing.
Let’s hope for those deposits developed in Transcarpathia, expanded in the Drohobych district and in other areas. I believe that this salt should be enough to provide for the population. Its price will range from 25 to 30 hryvnias.
How are you avoid panic buying? What exactly should you stock up on?
There are already many recommendations from the authorities regarding the period of dangers created by Russia. However, collecting, buying something in bags, creating a stir – it’s not worth the trouble. You can make some stocks of long-lasting cereals, fast foods, and also have salt, sugar, flour, sunflower oil, cookies, dried fruits, and other food.
Antonina Kostyk spoke
Translated by Vitalii Holich
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