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    July 12, 2017

    Recipe for Famine: Ukraine to face up to 50% food price hikes

    July 12, 2017 - Fort Russ News - 
    By Nika Aprelskaya, Cossack Herald - c.e. by J. Arnoldski - 



    On July 1st, the Ukrainian Cabinet of Ministers' Resolution No. 394 from June 7th went into effect, thereby ending state regulation of food prices. 

    With this resolution, the Cabinet of Ministers effectively abolished the previous regulatory system according to which food producers were required by law to justify in front of the State Procurement Service any changes in the wholesale prices of their products. The previous list of such "social products” approved in 2008 was regulated, which meant that it prevented marginal trade mark-ups on food prices from exceeding 15% of the manufacturer's wholesale price. Such basic products as flour, bread, pasta, cereals, sugar, beef, pork, poultry, boiled sausages, milk, cheese, sour cream, butter, sunflower oil, and chicken eggs fell under this category. In addition, the state set marginal levels of profitability and trade allowances in the amount of not more than 20% for baby food, fees for services provided in retail facilities, and profitability standards on markets for food sale and non-food products. 

    The justification for the cancellation of such regulations is, as always, beautifully stated on paper as being for "reducing administrative pressure on business, eliminating excessive state interference in economic processes, developing competition and getting rid of the excessive bureaucracy in the pricing field." It was implied that prices would even fall depending on market fluctuations.

    As an experiment, from October to December 2016, the government abolished regulations for setting the maximum trade margin of 15-20% for 17 groups of goods. During the period of the regulation's cancellation, the government reported, "prices have grown no more than usual." On this basis, a resolution was adopted according to which the state hereby refuses to regulate prices in the future. Ukrainian experts believe that already by autumn of this year, prices for food will grow by 20-50%. This has been reported by Ukrainian National News (UNN).

    "The price increase will not be felt from July 1st, but, for example, from August 1st. The regulation of food prices is only a safety device which we used to have and no longer have. The question is wether there will simply be speculation, which we will be able to see in September. Prices are still rising now, but we do not see big leaps. It usually happens just in September, though. And we will see an increase in prices not by 5-10%, but by 20-50%,” Aleksei Doroshenko, the Chairman of the Association of Trade Networks, said on UNN.


    Doroshenko also noted that such price fluctuations occur at 1-3% in Europe, something understandable when compared to Ukraine, where the level of inflation eats more than 10% per year alone. In addition, the prices for energy carriers, the maintenance of personnel, company taxes, the purchase of imported raw materials, transportation, and many other services and goods are constantly growing, a fact which forces producers and the sellers to raise the prices of their goods.

    This is yet another testimony of how Ukraine stubbornly continues to travel down a dead-end path, striding like a horse but in fact resembling a lost toad. Ukrainians, meanwhile, are sinking ever-deeper into poverty. 




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