Discarding food is no longer acceptable. How will prices change after the New Year?

If we are to believe surveys, today 44% of Ukrainians are cutting back on food expenses. Economists state that despite the government's efforts to formalize the economy, a reverse process is currently underway: many Ukrainians are taking on unofficial jobs to earn cash and at least meet their basic needs.

Food Exports: Continuously Rising

Today, as producers almost unanimously report a significant decline in domestic consumption and a mass shift towards cheaper products, the increase in exports seems quite logical. On the other hand, says World Bank expert Oksana Ruzhenkova, when examining the growth dynamics of exports, doubts arise regarding the actual state of producers; it may not be as dire as they claim.

"In the first ten months of 2024, egg exports increased one and a half times, hard cheese by 41%, baked goods by 22%, whey by 26%, condensed milk by over 6%, and chocolate by 13%," the expert cites. "At the same time, sausage exports grew by 28%, and canned meat nearly doubled (+94%). Under such conditions, it is difficult to claim that Ukrainian food producers are in dire straits—they are still earning foreign currency, and quite a bit at that."

Considering these figures, producers could have kept prices stable through export trade, according to Ruzhenkova. However, not only are they failing to do so, but they are also gradually scaling back their businesses.

Firstly, they fear tax increases that have already been passed by the Verkhovna Rada but not yet signed by the president. This will directly affect all "white" businesses and partially "gray" businesses, which, in turn, will pass on the increased costs to consumers.

The vegetables for borscht have already become "golden" in Ukraine

Secondly, the expert continues, companies are factoring in utility issues into their prices: rising electricity costs and potential water supply problems due to shelling.

Finally, mobilization also contributes to this situation. Critically important enterprises are allowed to keep only 50% of their staff, but they are not consulting with businesses on who to mobilize from the 50% quota. This means that instead of a warehouse worker, a rare specialist might be taken without proper checks against the lists provided by the company.

Vegetables and Fruits: Prices Will Continue to Rise

The vegetables for borscht have already become "golden" in Ukraine, selling for much higher prices than in many European neighbors. For example, while potatoes in Estonian supermarkets cost 34 cents and carrots 33 cents, the minimum prices in Ukrainian supermarkets are 28.70 UAH (equivalent to 66 cents) and 26.80 UAH (61 cents), respectively. Experts do not doubt that vegetable prices will continue to rise.

As for forecasts, prices for vegetables and fruits are expected to spike during severe frosts. If power outages occur during this time, storage facilities will be left without electricity, leading to spoilage, and producers will need to urgently offload substandard goods, increasing market supply. Imports may partially dampen rising prices, but significant reductions should not be expected.

Moreover, the expert adds, a wave of bankruptcies has begun in several segments, with about 40% of enterprises engaged in vegetable processing currently seeking investors.

Information from "Ukrtsukor" is also not encouraging. Recently, they reported that 29 sugar factories will operate in the 2024/2025 season, while there are 38 in Ukraine.

"Vegetable processing will continue to shrink in 2025," Ruzhenkova predicts. "This year we already have a poor harvest of peas and corn. Hundreds of hectares of vegetable fields are flooded and cannot be restored."

About 40% of enterprises engaged in vegetable processing are currently seeking investors

On a positive note, there is an expectation of increased potato production next year. "Many potato farmers sold out not only their entire food supply but also seed potatoes by November, whereas previously seeds could be sold until late spring," says Oksana Ruzhenkova. "This indicates that new industrial producers are entering the segment. The profitability of vegetable farming is currently high, which explains the interest from both large agribusinesses and farmers. Regardless, vegetables will not be cheap next year, as Ukraine has yet to recover both the lost areas and volumes since the onset of full-scale war."

Dairy Prices Rising, Meat Holding Steady: What About Other Prices?

According to Ruzhenkova, bread prices will hold steady for as long as possible because it is a staple product, and prices cannot be raised by more than 5% without informing supermarkets a month in advance. Thus, significant fluctuations are not expected here.

More or less positive expectations from experts are related to meat, where producers feel secure.

"Pork production demonstrated over 300% profitability last year, so current pork prices are encouraging," says Ruzhenkova. "Whereas pork used to sell for 250-260 UAH, now the same shoulder can be bought on sale for 145-150 UAH. Prices are likely to remain at this level until the New Year, so the festive table could very well feature meat."

However, the expert adds, processed meat products—sausages and canned goods—will continue to rise in price. Poultry producers, who are only discussing rising production and feed costs, are also facing difficulties. "According to MHP's report, over three quarters of 2024, the company reduced poultry production in Ukraine by 8%, while in Europe it increased by 11% during the same period," Oksana Ruzhenkova cites. "The business is well aware of the internal market dynamics and is ready not just to export as much as possible but also to produce abroad."

Export volumes have also increased for dairy producers, although the cattle herd in Ukraine has decreased by more than 10%. In this regard, the World Bank expert raises a reasonable question: what remains on the domestic market?

"Given the significant rise in butter prices in Europe, they could have capitalized on exports to keep prices stable in the domestic market," Ruzhenkova states. "But no: in Ukraine, prices are already so unreasonable that consumers are switching to spreads en masse."

What’s Next: Prices Won't Go Down

Typically, experts offer traditional forecasts for December and January: in December, ahead of Christmas and New Year, prices will sharply rise, and in January, they will gradually decrease. This year, specialists are less optimistic, suggesting that a January price drop is unlikely. In other words, prices will rise for nearly everything before the New Year, and then the rate of increase will simply slow down.

Before the New Year, prices will rise for nearly everything, and then the rate of increase will slow down

"The main thing is to survive the winter, and by mid-spring, it will be easier," believes Oksana Ruzhenkova. "Early vegetables will appear, milk yields will increase, and hens will start laying eggs. For now, it seems that we will have to eat less. I often see Ukrainians buying vegetables 'like in Europe': paying at the checkout for one carrot and one onion. Moreover, I know that many have started storing borscht vegetables in the fridge because throwing away potatoes or carrots at current prices has become too expensive. Ukrainians have almost stopped throwing away food."