The Ukrkondprom association states that a number of confectionery producers will receive natural gas on benefits as bread producers, which may create preconditions for distorting competitive conditions in the confectionery market.
Oleksandr Baldyniuk, President of the Ukrkondprom association, announced this to Ukrainian News Agency.
According to him, in accordance with the government's decision, natural gas at a reduced price should have been directed to support producers of only socially significant products.
"The corresponding list of products was previously approved by a resolution of the Cabinet of Ministers, and, among other things, there is rye-wheat bread. The Ministry of Agrarian Policy and Food has included in the list all enterprises that, upon registration, indicated as the main activity of the KVED 10.71 "Production of bread and bakery products; production of flour confectionery products, cakes and pastries of short shelf life", although the fact of registration in itself does not in any way oblige these companies to produce bread, they can produce any other products provided for by other KVEDs, which are simply not the first to be indicated during registration (as a rule, always several types of activities are indicated during registration)," he said.
Also, according to him, what activities are carried out by most of these companies, no one knows.
Baldynyiuk added that at the same time, even a superficial analysis of the list clearly demonstrates that it includes a number of confectionery manufacturers, which even have names typical for confectionery manufacturers, which indicates a corresponding range of production.
He noted that even those companies that produce bread, as a rule, also simultaneously produce a wide range of flour confectionery products and are direct competitors in the market for confectionery enterprises not included in the abovementioned list.
The president of the Ukrkondprom association said that, according to the association, certain control over the use of this natural gas is expected, which the enterprises will receive at preferential prices.
“But in conditions when one and the same enterprise simultaneously produces both bread and a confectionery group of goods, it is technically difficult to assess and control the distribution of used natural gas by type of product. In this case, abuse cannot be avoided. And this can create preconditions for distorting competitive conditions in the confectionery market, when some of the confectionery producers will be able to get natural gas at prices several times lower than all the others, and will gain competitive advantages in the market," he added.
Baldyniuk believes that in the current format, supporting producers of socially significant products is a more populist step than real concern for the consumer or food producers.
He stressed that such selective support for certain industries is nothing more than a profanation, because consumers cannot buy only those products that are included in this list approved by the government, and a sharp rise in the price of all other types of food will strike no less a blow to the wallet of citizens.
The president of Ukrkondprom believes that the authorities are not at all asking the question of how exactly all other food enterprises will survive, whether they will be able to work in such conditions or will be forced to lay off workers and stop production (and with it - payment of taxes to the budgets of all levels).
"Ukrainian confectionery manufacturers buy natural gas at the so-called market prices. Contracts for the supply of natural gas in January 2022 were signed back in December 2021 at exchange prices. Depending on the date of signing the contracts and the supplier, the price for each individual enterprise will be individual, but on average - about UAH 45,000-50,000 (for 1,000 cubic meters)," he added.
He said that, according to the members of the association, over the past year all raw materials have significantly risen in price: flour - by 50%, fats - by 60-70%, cocoa powder - by 50%, eggs - twice, sugar began to rise in price one and a half years ago and has risen in price during this time by about 2.5 times; cardboard packaging - by 60%, plastic wrap - by 10-15%, logistics - by 20-30%.
“In addition to this, the cost of energy resources has sharply increased: electricity for industrial consumers has approximately doubled, and the price of natural gas has crossed all reasonable limits and on some days reached UAH 90,000 per thousand cubic meters. But even if we take the average cost of natural gas for producers, which was in recent months - about UAH 50,000, then the rise in price for the year - more than 10 times (in January 2020, the price was UAH 4,900)," Baldyniuk said.
He noted that this could not but affect the production volumes, they are decreasing, but the import volumes are growing rapidly - last year the growth was about 30%.
According to him, the industry is now in a deep crisis, so it is possible that not all enterprises will be able to survive this difficult period, but for those who can survive, it will not pass without consequences.
He also noted that this is a significant blow to the financial and economic situation of enterprises; all the resources that could be used to modernize the production capacities of enterprises are now simply used to not curtail production even with negative profitability.
As Ukrainian News Agency earlier reported, in January, the Ministry of Agrarian Policy and Food approved a list of 6,803 producers of socially important products that will be able to buy domestic natural gas with a limited margin of 25%.
In December, the Ministry of Agrarian Policy signed a memorandum with manufacturers of socially significant goods.
The Cabinet of Ministers has limited the level of premiums to the price of self-produced natural gas for producers of flour, bread, milk, chicken and sunflowerseed oil.
The All-Ukrainian Association of Bakers predicts interruptions in bread production due to rising natural gas prices.
The Ukrkondprom association predicts that a number of confectionery enterprises will stop working due to the rise in natural gas prices since January.
The Union of Dairy Enterprises of Ukraine claims that the rise in natural gas prices may lead to a halt in the work of the dairy industry.
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