Dear Borscht: Understanding the rising costs of meat and vegetables—what's driving the price increase?

The period of stable prices has come to an end due to the depletion of vegetable stocks in storage. As a result, the price of potatoes in Ukraine has risen to 20-30 UAH/kg, carrots have increased in price and now cost 23-30 UAH/kg, wholesale offers for tomatoes range from 85-105 UAH/kg, and cabbage at the beginning of the year is priced at 25-35 UAH/kg, which is three times higher than last year. This is confirmed by data from the EastFruit project. What do experts in the agricultural sector recommend and what are their forecasts for Ukrainians?

Strategic Dish at Risk

According to experts, the main reason for the latest price increase in the vegetable segment has been the overall reduction in vegetable supply, particularly potatoes from local farms. Many Ukrainian producers, lacking the capacity for long-term storage, ended their sales in the first half of the current season.

The Deputy Chairman of the All-Ukrainian Agricultural Council, Denis Marchuk, commented on the situation, adding that the situation will not change at least until March.

Due to a number of factors, the price increase has been quite significant. Unfortunately, forecasts for the winter period do not indicate a decrease.

Oksana Ruzhenkova, a World Bank expert in fruit and vegetable development, agrees. She stated that we consumed early and mid-season vegetables back in spring and early autumn, so now we should be seeing late vegetables; however, due to the loss of southern territories, there is a noticeable shortage.

The loss of southern territories has led to a shortage of late vegetable varieties.

"We lost the southern regions, particularly parts of the Kherson region, and the Dnipropetrovsk and Zaporizhzhia regions suffered from summer heat, which are significant producers of both cabbage and carrots, so we are facing difficulties with these crops. The products that are being stored are definitely more expensive than last year, as all storage facilities operate using electricity, which has significantly increased in price in Ukraine," Ruzhenkova noted.

Moreover, vegetables do not grow without irrigation, and the summer of 2024 was extremely dry—some regions went without precipitation for over three months, causing some crops to suffer from drought, and even those that were irrigated received only 1/10 of the necessary volume. As a result, Ukrainians were purchasing vegetables for borscht at higher prices than the previous year during the summer.

According to Denis Marchuk, another factor contributing to the price increase and electricity shortage has emerged.

"Inflation. If the forecasts for the end of the year were around 9%, now inflation exceeds 11%. Therefore, we note that during the winter period and partially in March, prices will rise by 10-15%," he said.

In addition to vegetables, according to Denis Marchuk, prices for meat, milk, and fruits will also increase by the end of winter.

Fruits will particularly depend on the exchange rate of the hryvnia to the dollar due to their imports.

"We see that currently the hryvnia, unfortunately, is slightly depreciating, and consequently, the dollar is rising. If this trend continues, the purchasing price will increase," Marchuk added.

Price Stabilization: What the Ministry Says

According to the Minister of Agrarian Policy and Food, Vitaliy Koval, to stabilize prices and shorten the supply chain from farmers to consumers, storage facilities are needed. Solving the issue of vegetable storage will help stabilize prices. He stated that in Ukraine, it is necessary to build vegetable storage facilities in each region that can hold at least 10-20 thousand tons of products.

It should be noted that Ukraine's minimum need for potato storage facilities alone is 1.38 million tons.

"We have a systemic, chronic problem with a shortage of vegetable storage facilities... The drought this year reduced the vegetable harvest by 20%. We felt this immediately. It was evident in the prices, as there was a shortage of some products. Additionally, the lack of storage incentives, which affects the preservation of products 4-6 months after harvest, negatively impacts prices," Koval said during a telethon.

The drought this year reduced the vegetable harvest by 20%.

He noted that by 2025, Ukraine should launch a program for vegetable storage facilities.

"If we do not start building during the war, this chronic problem will persist. The more vegetable storage facilities are built, the more stable the prices will be," the minister added.

In the meantime, until new products appear, experts predict price increases for carrots (by at least 20-30%), cabbage, and potatoes.