According to First Vice Prime Minister of Ukraine Stepan Kubiv, abandoning state regulation of the market is a pilot project, aimed at assessing the effectiveness of administrative measures to constrain food price rises for less wealthy consumers.
Union of Agricultural Service Cooperatives head Ivan Tomic has said that, by the end of the year, prices for red meat will rise by an average of 8-15%, and by up to 20% at most, as a result of the move. He also believed no price rise would be seen in the poultry market.
“There is a more stable situation in the poultry market, as the majority of the industry is controlled by large manufacturers with huge capacities and low-cost technologies. So there will be no significant changes in [poultry market] pricing policy,” said Tomic.
However, market observers who have monitored the industry have said that, in the second half of October, poultry meat prices reached UAH60 (US$2.31) per kg, an increase of nearly 40% since the state regulation was lifted. By comparison, prices for pork have only risen 15% to UAH70 (US$2.69) per kg.
According to Alexei Doroshenko, director of the Association of Suppliers to retail chains, the main reason for the sharp rise in poultry prices lies in the consolidation of the industry into the hands of a few players.
“Nearly 70% of poultry meat production is handled by one market player, while another accounts for 65% of egg production," said Doroshenko. “They took advantage of the current situation and raised prices,” he suggested. He added that, in other segments of food industry, the rise in prices had been moderate, due to stronger competition.
Meanwhile, the press office of Ukraine’s Union of Poultry Producers has said the main reason for poultry price rises has been the increase in the cost of feed, as well as some reduction in the country’s poultry population. At the same time, Artur Loza, head of Ukraine’s Union of Pig Producers, has suggested that the lifting of state regulation is not the reason for the rise in pork prices, because “this regulation has never actually worked”.
Other market participants have expressed similar opinions, saying that the state regulation of prices has been largely overestimated.
“In fact, the price control office is a vestige of the Soviet Union,” said Alexander Ohrimenko, president of the Ukraine Analytical Center. “It has been controlling prices pro forma – and I would like to stress pro forma,” he explained. “As a result, this [lifting of state regulation] has had no serious effects.”
According to Ohrimenko, from the start of next year, even with the possible re-introduction of state regulation, meat prices would not revert to the levels seen in September. Meanwhile, some market participants believe the State Antimonopoly Service should deal with any rise in prices from now on as, even with state regulation cancelled, manufacturers are not allowed to raise prices uncontrollably for their products.