Ukrainian bakeries are on the verge of shutting down – bread prices may sharply increase in the near future

Many bread factories in Ukraine are on the verge of stopping production, with some already switching to a single shift. This situation poses significant risks of bread supply disruptions in stores, especially in regional areas.

According to Yuriy Duchenko, President of the All-Ukrainian Association of Bakers and head of the company “Kyiv Bread,” the prices of flour have been rising since spring. Flour prices have increased by 50%. In April, bakers were buying flour for 10 hryvnias (0.22 euros) per kilogram, but now they have to pay 15 hryvnias (0.34 euros). It is expected that flour prices will rise even more in the fall.

In July, flour mills experienced widespread power outages and had to operate on generators, significantly increasing production costs. According to Duchenko, the cost of flour accounts for 40% of the production cost of simple bread recipes.

Besides flour, other components such as sugar, sunflower oil and packaging materials are also becoming more expensive. The prices of raw materials (excluding flour) have increased by more than 20% since the beginning of the year.

Despite these rising costs, according to the State Statistics Service of Ukraine, the price of bread increased by only 1.1% in June.

“Most major bread producers either operated at a loss or broke even in June and July,” says Duchenko.

There is no longer state regulation of bread prices in Ukraine. However, as journalists were told at one of the bread factories, retail chains have a requirement that prices can only increase by up to 5% per month. Therefore, bakers cannot set higher prices.

According to Duchenko, considering the increased costs, bread prices should rise by 15-20% in the near future.

“Apart from flour, there are many other factors affecting the cost. Our personnel costs have increased because many men are being mobilized, forcing us to raise salaries. Logistics costs are also rising. We are not just one step behind market realities, but several steps behind. This results in continuous losses month after month, and we have no means to cover cash gaps anymore. Alternatives are such that by September, we will not be able to pay suppliers or wages,” says the head of one regional bread factory.

Bread remains a local product in Ukraine. If a bread factory in a city stops production, there will be supply disruptions both in local stores and in neighboring villages.

“The situation today is such that the question is not even about the price of bread but whether there will be bread at all,” says the head of the bread factory.

He also mentioned that many customers, especially state institutions, do not pay on time for delivered bread. Specifically, for army supplies, the debt can reach up to four months.