finance & markets

The specter of hunger

07.02.2014 | Svitlana Popel

Some businessmen are tempted to organize a food crisis on the backdrop of the national unrest. No one seems to be trying to prevent such a turn of events

In The Global Food Security Index 2013 published by The Economist, Ukraine is ranked 47th of the 107 countries surveyed on the criteria of affordability and availability in the category of food security. Ukraines Ministry of Agrarian Policy and Foodstuffs says the blockading of the ministrys building on Khreshchatyk poses the greatest of threats to the nation´s food security in the country. Agrarian experts point to other threats

Food shortages on horizon

On the one hand, thanks to the record high yield in 2013 Ukrainians will not be left without bread. On the other hand, the structure of the consumer basket will notably transform. Head of the Financial Analytical Department at Prioritet Consulting Mykola Chumak believes the current devaluation of the hryvnia against foreign currencies could lead to a sharp increase in the prices of imported goods over the next several months. This will primarily affect the prices of fish, fruits, tea, coffee and olive oil. One of Ukraines leading importers of seafood products Scandinavia plans to revise its prices if the dollar does not roll back on the interbank exchange over the next few weeks. Also, confectionary goods and sausages made in Ukraine, the majority of which are produced using foreign raw materials (over 60%), will be affected, says Chumak.

Panic among the people is another factor that undermines the food security in Ukraine and cannot be ignored seeing as users of social networks have of late been seriously discussing the need to stock up on food products. Although retailers claim that customers are not yet sweeping products off the shelves, vendors at public markets and small grocery stores are trying to gain from the situation by creating artificial shortages and raising prices.

One of the examples is that such a product as pork fat has practically disappeared from the capitals markets since early January. In truth, there is plenty of it available for sale, but vendors do not put it on the counters preferring to sell it under the table at 10-15% higher than it was offered for sale on the eve of the New Years holidays.

The other example is the rising prices of cereals. According to Commercial Director of Khorol Serhiy Ivashov, the prices of buckwheat grew by nearly 9% since last fall and millet by 4%. Industry experts predict that the wholesale prices of such a necessity good as cereal could increase from the current UAH 8-8.5 to UAH 12/kg, particularly since farmers are not planning to increase its planting.

The situation is similar with other cereals. As Head of the Agrarian Union of Ukraine Mykola Novikov claims, producers of agricultural products try to profit the most from shipments of grain crops for domestic consumers due to the unfavorable price situation on the global market. In order to prevent further price speculation, officials monitoring the market of agricultural goods should have introduced measures of market intervention and state regulation to stimulate domestic producers.

There´s bigger fish to fry

Ukraine still has neither a legislative base for the security of domestic agricultural products nor a plan for the protection of domestic consumers. The quality constituent of the food basket on which the majority of Ukrainian households spend on it apparently does not concern the government. According to The Global Food Security Index 2013, Ukrainian families spend 55% of their earnings on food products. In addition, acting Vice Premier Kostyantyn Hryshchenko openly pointed to the declining quality of nutrition of Ukrainians. Statistic figures indicate a sharp drop in Ukrainians consumption of biologically nutritional products. In particular, the consumption of meat products fell by 37%, milk and dairy products 35%, eggs 38%, fish 81% and vegetables and fruits 49% alongside the steadily high consumption of bread products, animal fats, legumes and potatoes, he said.

Such disproportions in the chemical composition of nutrition are the main risk factors of different diseases. Nonetheless, according to diet specialist Oleh Shvets, Ukraine still does not have clear indicators of the countrys food security.

Attempts to legalize the norms determining the daily energy ratio per one average resident of Ukraine at the level of 3,000 calories and then 2,500 calories have failed twice. For comparison, in the U.S. this indicator is 3,650 calories and in the EU countries 3,400. As a result, the draft laws on food security were not adopted, though this issue has been debated for the past five years.

Director of the ProAgro consulting company Mykola Vernytskiy believes that ignoring the importance of consumption of certain types of food products stimulates new crises. The availability of real food programs of social protection and effective measures to safeguard the poor strata of the population from shocks in connection with the disruption of food supplies would help avoid short-term consequences of price fluctuations and artificially created crises, the expert believes.

However, the new concept of food security in Ukraine recently approved by the ministry has a different focus. According to acting Agrarian Ministry Mykola Prysyazhnyuk, the officials plan to draft a food security policy by developing a national seed and breeding base, improving the yield level of soil and balancing crop rotation. Taking into account the huge reduction of budget financing of the agrarian sector in 2014, however, one can only guess where the funding will be found to implement the aforementioned projects

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