Rising energy prices have led to higher production costs

Nov 25 2021 published c Uncategorized, Activity, earnings, news

- Most Ukrainian companies do not have long-term contracts with gas suppliers. The resource has to be bought monthly at stock prices. In particular, in October, the cost approached 40 thousand hryvnias per thousand “cubes”. In November, the average was close 33,5 thousands, - tells 51Annual Alexander Baldynyuk, President of the Association “Ukrkondprom”.

- The practice of forward contracts is widespread in the European Union. Producers can order a certain amount of gas at a certain price. It is selected and paid for gradually over the course of a year. In Ukraine, to book a certain amount of gas per year, you must make the full cost in advance. Then pay for storage in warehouses. A medium-sized confectionery company uses approximately 300-600 thousand cubic meters of gas per month. During the heating season, the need increases even more.

Rising energy prices have led to higher production costs. Previously, the share of gas in products was tentative 4 interest. Now - 10-15, depending on the product. The biggest price blow was suffered by the flour confectionery group - cookies, cakes, biscuits. They are baked in gas ovens. In addition, increased the price of packaging on 15 percent. Tara added 38 interest, flow - 6, alcohol and condensed milk - 3 interest.

Difficult situation with sugar. This is one of the main ingredients for confectionery. It has doubled in price over the last year. Increasing the cost of gas will add to the cost of sugar even more 40 percent, according to manufacturers.

The decline in production at most confectioneries has been going on since the beginning of the year. The rise in prices for raw materials affected, energy resources. Manufacturers try to work even with negative profitability, to stay in the market, save volumes, staff and commercial relations. In addition, most companies have long-term obligations to customers. And they must fulfill them, in order not to receive penalties. It is therefore important, that the government find a way out of the situation even before that, as businesses begin to wind down. After all, after the stop, it will not be easy to resume work. At the same time, the same gas and sugar in Poland cost less. Loans are more affordable. Our companies have already started to lose competition to foreign manufacturers. This year, imports grew by more than a third. Further increase in prices for confectionery will only complicate the situation.

The full text of the article can be found at the link: https://gazeta.ua/articles/money-newspaper/_sob-teplicyam-vitrimati-ovochi-povinni-podorozhchati-na-120-vidsotkiv/1060899

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