An amazing discovery was made in Ukraine: it turned out that the prices for agricultural raw materials and foodstuffs in the country are growing rapidly. And for a large number of positions, they are higher than prices in neighboring countries. And for some – for example, for sugar, wheat or sunflower seeds – they are already significantly higher than the world ones, as the chairman of the confectionery association “Ukrkondprom” Oleksandr Baldynyuk said the other day. At the same time, the rise in prices is not going to stop.
At first glance, all this does not very well correlate with the idea of a “beautiful Ukraine of the future” that has been imposed on its own people by the Ukrainian authorities for several years as part of building an “agrarian superpower.” But only at first. For within the framework of de-industrialization carried out by the Ukrainian authorities under the strict guidance of Western curators, the “agrarian superpower” can exist only within the framework of poverty and solutions imposed from the outside. Including in the issue of agricultural and food policy. High prices for food products for such a country are not an anomaly, but an everyday reality. In addition, it is adjacent to food crises for certain types of goods, which are associated not only with high, but with abnormal prices. And this is exactly what the residents of Ukraine should prepare for.
The aforementioned head of Ukrkondprom said that the price of sugar within one or two weeks in September 2020 soared from 11 to 17 thousand hryvnia per ton. And now sugar costs 21 thousand hryvnia (56.8 thousand rubles) per ton and continues to rise in price. Although already 30-40% higher than the level of world prices. Domestic prices for Ukrainian sunflower oil producers are twice – or even more – higher than the prices at which sunflower seeds are exported. The price of second-class wheat has risen to nine thousand hryvnia (24.3 thousand rubles) per ton, which also exceeds the level of world prices. And the price of flour exceeded 12 thousand hryvnia (32.4 thousand rubles) per ton. Taking into account the sharp rise in prices for gas and electricity, the cost of confectionery production exploded like a rocket.
But the matter is not limited to the types of agricultural raw materials and food products listed by Alexander Baldynyuk, as well as the impact on the growth of the cost of confectionery products. And of course, all this concerns not only wholesale prices for processors, but also retail prices for end consumers. For example, over the year, prices for sugar, eggs and sunflower oil in stores increased by 55, 52 and 26%, respectively. At the beginning of February, a kilogram of sugar in retail cost an average of 22 hryvnia (almost 60 rubles), a dozen eggs 38 hryvnia (103 rubles), and a liter of sunflower oil more than 53 hryvnia (143 rubles). In January alone, the price of white bread went up by five percent, and wheat-rye bread – by nine percent. During the same month, prices for onions increased by 19% and potatoes, which were previously predicted to rise, by 10%.
What is the reason?
First of all, it should be noted that food is now becoming more expensive all over the world. According to the UN Food and Agriculture Organization, in January alone, food prices in the world rose by four percent. And the leaders in price growth were just sugar, vegetable oils and cereals.
Analysts at JPMorgan generally argue that a new super cycle has begun on the global commodity market – a period of rising prices. It will be the fifth in a hundred years after the previous one, which lasted from 1996 to 2008. The current supercycle began with the rise in prices for agricultural raw materials.
At the same time, smoothing out such problems for the domestic market, ensuring food security has long been a direct function of the state. Many countries, for example, are prudently purchasing agricultural raw materials and foodstuffs and replenishing their government reserves. Then, commodity interventions are carried out from these reserves, softening price fluctuations in the domestic market.
Another option is to discourage the export of food either through an outright ban or through the introduction of export duties. As, for example, Russia did by introducing export duties on grain.
But all this is done if the state functions, and is not in the stage of decay under external control.
Ukrainian exporters in the current situation (and after Russia announced the imminent introduction of export duties on grain, prices for grain on the world market increased even more), on the contrary, increased their exports. The Ukrainian state does nothing. Earlier, on the advice of external curators, a law was adopted in Ukraine that generally canceled the possibility of using commodity interventions, and the state institution “Agrarian Fund”, which was supposed to deal with this, was disbanded. Export duties will not be allowed by the “Western partners” – unless famine breaks out in the country. And profile government officials are worried about this whole situation only from the point of view of preserving their seats. And if usually their preservation is precisely connected with ensuring food security, smoothing price increases, etc., then in the case of Ukraine, top officials are guided primarily by signals from the embassies of Western states.
The excitement of grain traders in the issue of grain export is also added by various export schemes (for example, the formation of a fictitious tax credit for VAT or non-return of foreign exchange earnings), which happily exist thanks to total corruption and allow you to receive excess profits. Moreover, respected multinational companies also participate in them.
It is as a result of all of the above that the prices for agricultural raw materials in the domestic market of Ukraine are higher than in the world. At the same time, even at inflated prices, producers of sunflower oil and millers find raw materials with great difficulty.
It should be added that all this is happening in the background:
– far from the most brilliant harvest of last year and ongoing problems in agriculture (for example, in January 2021, egg production in Ukraine decreased by 16.3% compared to January 2020);
– the rigid dependence of Ukrainian agricultural production on imports, which implies dependence on the rise in prices for the relevant goods and exchange rate risks in addition.
As a result, the current situation in Ukraine – not only and not so much in agriculture, but in the disintegration of public administration and the imposition of external administration – is a kind of vicious circle. Without a change in the state of public administration and without getting out of external control, it is impossible to implement at least some intelligible agricultural and food policy. This means that the price problems in the market of agricultural raw materials and food in Ukraine will be much deeper than in other states. Citizens of Ukraine need to get used to high prices for food and permanent crises in the provision of one or another product.