“Ukrkondprom”: Confectionery Makers Halt Production Over “Super-High” Gas Prices

Over the year, the gas price rose from 5,900 hryvnias to over 73,000 at the end of December.

Confectionery companies from the Ukrkondprom association have announced the suspension of production of part of their range.

The association said that this step is linked to “super-high” gas prices, which make production unprofitable.

As a result, some companies in the industry have already told the association about plans to fully or partially scale back production.

According to association president Oleksandr Baldynyuk, on December 22 the exchange price of gas exceeded 73 thousand hryvnias. Therefore, companies are forced to suspend or scale back part of their production. 

Over the past few months, association members have been on the verge of unprofitability due to gas prices and the rise of all other components of production costs.

It is claimed that gas prices for producers rose throughout 2021. In January, the price for producers was 5.9 thousand hryvnias. 

In November it was about 40 thousand hryvnias. Already at such a price, producing many types of confectionery products was unprofitable. In December the price rose from 55 to 73 thousand hryvnias per thousand cubic metres of gas.

“At such production costs, the products will not be in demand either on the domestic or the foreign market,” Baldynyuk said.

According to him, not only confectionery producers have faced this problem, but also other food industries, and if the authorities do not intervene, it could lead to “catastrophic” consequences.

Oleksandr Baldynyuk
President of the Ukrkondprom association

Such gas prices are unaffordable for industry, so the authorities’ attempt to ignore the existing problem and avoid resolving it is already leading to the shutdown of many plants, staff cuts and a sharp drop in state budget revenues. This will also result in a significant rise in prices for food products, leading to a deterioration in purchasing power and a fall in citizens’ living standards. 

He is convinced that the only way out of the situation is to provide food producers with gas at affordable prices.

Oleksandr Baldynyuk
President of the Ukrkondprom association

According to government data, the cost of Ukrainian gas is about 3 hryvnias per cubic metre, and all food industries together consume only 6% of the total industrial gas demand. Therefore, it is possible and necessary to temporarily provide preferential gas prices for producers that ensure the country’s food security, and this must be done as quickly as possible, since enterprises will begin to shut down from the beginning of January.

The president of Ukrkondprom called on the authorities “not to delay” and to intervene in the situation in the food industry, “because the crisis in the food sector may have catastrophic consequences both for the economy and for the country as a whole.”

Separately, it can be assumed that the crisis will hit the Roshen confectionery corporation the least.

Given the huge exports of the company’s products to European Union countries and stable demand, profitability may be maintained through higher prices for products in foreign markets. 

Currently, Roshen candies and cookies can be found in EU stores at an average price of €5–7/kg in Eastern Europe and €8–15 in Western and Northern Europe.

Members of the Ukrkondprom association:

• PE “Roshen Confectionery Corporation”
• PJSC “Kharkiv Biscuit Factory”
• LLC “AVK Confectionery”
• LLC “Interstarch Ukraine”
• PJSC “Mondelez Ukraine”
• LLC “Nestle Ukraine”
• PJSC “Dominik”
• LLC “Yarych Confectionery Factory”
• LLC “Mir Lakomstva”
• UASP in the form of LLC “Galka LTD”
• PJSC “Rivne Confectionery Factory”
• LLC “Kherson Confectionery Factory”
• PJSC “Dnipropetrovsk Confectionery and Chocolate Factory”
• PJSC “Yasen Food Company”
• LLC “VKG Lesna Skazka”
• PJSC “VTKF Lasosi”
• PE “Zeelandia”
• LLC “Shokoooooooolad”
• FLP Mateev O.V.
• LLC “Ukrkava”
• PJSC “Enny Foods”
• LLC “Agr-YUG-Service”
• FLP Dykyi P.D. TM “Zharym kofe v Odesi”
• CJSC “Odessakonditer”
• CJSC “Zhytomyrske Lakomstvo”
• LLC “Confectionery Factory Mercury”
• LLC “Invert”