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Flour abysmal record: Ukraine has lost exports and has started importing from Belarus. When will bread rise in price

In January 2021, Ukrainian millers produced 84,900 tons of flour, and that was the absolute monthly minimum since 1999 (earlier data simply do not exist). Ukraine is rapidly losing production and exports, experts told The Page. Moreover, we began to import flour from neighboring Belarus—it is cheaper there.

The main reason for the sharp decline in flour production was the rise in the price of wheat since October 2020, explained Rodion Rybchinsky, Director of the Association Millers of Ukraine, to The Page. Therefore, foreign clients began to refuse contracts, and that led to a decline in exports several times.

The rise in prices and the fall in incomes of Ukrainians also has played a role: the population has begun to buy less bakery products, and manufacturers, accordingly, have bought less raw materials.

In addition, the rapid rise in the cost of wheat has led to a shortage and the need to import flour from Belarus—it has turned out to be cheaper than Ukrainian one. However, the share of Belarusian flour in the total volume of domestic consumption is quite small for now—about 5%.

But it is not all that bad. According to the forecast of the Executive Director of the Economic Discussion Club, Oleh Pendzin, in 2021 the price of bread will grow by only 8-10% (slightly higher than the forecast inflation). But the cost of premium varieties of bread and confectionery products can grow by 20—25%. In general, the increase in the cost of bread is a long-term trend, because the cost of bread is influenced not only by the price of flour (which is 30% of the cost), but also by the price of electricity, sugar, yeast, etc.

At the same time, a surge in the flour market should be expected in 1.5 months, as enterprises will begin to prepare for Easter, Rybchinsky reassures.

Context. According to the results of the 2020/2021 marketing year, millers expect a decline in flour exports by 2.5 times, and total production will fall to 1.96 million tons. That is 9.7% less than last year.

According to government forecasts, wheat production in 2021 will be 25—26 million tons. Exports are expected to be 16.5—17 million tons. 12.3 million tons of them have already been exported. In 2020, wheat exports amounted to 16.06 million tons. At the best forecast in 2021, Ukraine will export almost 6% more wheat than in 2020.

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