The UAC Deputy Chairman Denys Marchuk told in his blog on Liga.Net who has the biggest profits in the supplying products chain.

Food accounts for almost half of all bought products of Ukrainians. Therefore, it is not surprising that the attention of citizens is focused on price tags on store shelves and this topic is always relevant.

We know that in recent months the factor of energy resources in the cost of products has become too high. And, of course, this forces manufacturers to raise prices for their product minimally. But beyond energy stores, for example, for milk producers, the cost of protein feed increased by 40% -50%, the price of home-grown feed increased by 40% and the cost of veterinary medicines by 25%. Moreover, prices for mineral fertilizers and logistics increased 3 times for all participants of the industry.

However, I would like to talk about those who receive the highest incomes in the supply chain. We are talking about retail chains.

The monopoly position in the retail market allows them to make markups on food up to 40%. Finally, all this leads to the fact that the price of products that are sold on the shelves is 40% higher than the money that producers receive as a result.

Moreover, using their monopoly, retail chains impose the agricultural producer or processor unfavorable conditions of cooperation. In particular, supermarkets unreasonably postpone payments for the products received. Often delayed payment for the goods can continue 90-120 days, which leads to a constant shortage of working capital at the producer’s balance. For retailers, these funds become noninterest bearing credit, which they use for the time they need. This allows you to import imported goods, for which you need to pay in advance, and open new centers.

Based on this, it is necessary to introduce state regulation of prices for socially significant products through the establishment of a maximum trade margin of not less than 5% and not more than 15% of the selling price of the producer at the legislative level. This step will help to stabilize and even reduce food prices for citizens.

Thursday, 13 January 2022