Bread has risen in price by 14% and it’s not over yet: a farmer tells what awaits Ukrainians next
13 September 2024 16:49
EXCLUSIVE
Wheat prices on global markets continue to rise rapidly, which promptly affects the price of bread. According to Denys Marchuk, Deputy Chairman of the Ukrainian Agrarian Council, this is due to several global factors, including drought and reduced harvest volumes in key regions. The expert spoke about this in an exclusive commentary to "Komersant Ukrainian"
Supply shortage and global implications
“The world price of wheat is rising due to the shortage of products caused by the drought in Europe, the US and other regions. Supply is decreasing, but demand for milling wheat remains high,”
– Mr Marchuk said.
According to him, the situation in Ukraine also plays a role. Although the crop losses due to drought in our country are not so significant, they still reduce the export potential. Given the global problems, demand for Ukrainian wheat also remains high, which allows us to expect further price increases in the next few months.
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Impact on the price of bread in Ukraine
According to the expert, the price of wheat in Ukraine affects only 20% of the cost of bread. The main factors behind the rise in price are energy costs, which have increased significantly due to blackouts.
“Electricity has become more expensive due to the use of alternative power sources, such as generators, which increases the cost of bread production by 4-5 times,”
– explains Marchuk.
Rising inflation is also a significant factor.
“In August, inflation was more than 7.5%, which directly affected the pricing policy. In 2024, bread went up by 14%, and in the coming months, the price will continue to rise by 2-3% per month,” he adds,
– he adds.
Currency and excise rate fluctuations
Another important aspect that will affect the price of bread is the hryvnia/dollar exchange rate. According to the farmer,
“If the dollar strengthens, it will definitely affect the cost of production, as a significant part of technical materials for bakeries is purchased abroad.”
As for the impact of excise taxes, Denis Marchuk does not see a major increase yet, as oil prices remain stable. However, he warns:
“If oil prices rise, excise taxes will also increase, which will further affect logistics costs.”
Thus, Ukrainians are expected to see further growth in bread prices, driven by both global factors and domestic problems.
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