May 16 2008, 16:18

Ukraine: cutting of the trade margins for potato, table beet, carrot and cabbage will just aggravate the price situation

To the opinion of Andriy Yarmak, the head of "Fruit-Inform" project, the Parliament's decision to support the initiative of the Government of Ukraine to set the limits on the trade margins for several products, including vegetables (potato, cabbage, table beet, carrot) is a blank populism with the negative consequences for the economics.

"Such limitations are just obscene for the country with the market economics - such decisions often lead to the boomerang effect", the expert says. Also, the margin may be controlled only in the large supermarket chains, and, this parameter seldom exceeds the ceiling level, set by the administrative measures there. However, as of today, the large chains control not more than 10% of these products trade and nearly 5% of the consumption, that's why the regulation will have no impact on the actual price situation. At the same time, the small legally operating shops will find the vegetable trade with such margin unprofitable. As a result, a part of trade may turn shady, and create the unnecessary rush demand, which often leads to the price increase. Also, such actions are always accompanied by the decrease of the budget incomes.

There is no way to control the margin on the city markets where the most part of fresh vegetables is sold. That's why the governmental initiative seems lame, to say the least of it.

At the same time, "Fruit-Inform" analysts speak about the possibility of the price decrease for vegetables in the coming weeks. However, this will happen not because of the governmental efforts. The seasonal factor will be the main reason of the price decrease for cabbage; the decrease of the import tariff rates because of Ukraine's entrance to WTO will lead to the carrot price decrease; and, potato will become cheaper due to the early field products of Ukrainian origin entering the markets.

You can get the details of the price perspectives for all major fruits and vegetables in a new season, and also new import tariff rates and the impact of Ukraine's entrance to WTO, if you read the survey "The forecast of the production and prices for fruits and vegetables in Ukraine in 2008". Please order the survey per tel: +38-0562-3207905 or e-mail: [email protected]. The survey costs UAH 2,500. The "Fruit-Inform" subscribers have the discount of UAH 500.