Information for fruit and vegetables business in CIS
Lemons became an upmarket product in Ukraine
The early September was marked by vigorous growth of prices for fruits in Ukraine. Consumers were unpleasantly surprised especially by prices for lemons which virtually established a record within a week. Currently, a kilogram of this product costs about twice higher than a month ago. A kilogram of lemons is sold at not lower than UAH 30 (EUR 2.83) at markets in Kiev. Similar situation occurs in other regions of the country.
Such growth of prices is more surprising, considering September practically not to be a season for importers of vegetables. During this period, consumer demand is comparatively low, unlike during months of flu exploding. By the way, current prices for lemons are already higher than in the period of previous year swine flu when lemons and garlic flied up in price to historical records.
“What is currently happening with prices for lemons is a direct result of our customs' actions. Overstating of customs value of the commodity and nontransparent schemes during customs clearance led to sharp decrease of import volumes, growth of import value and emerging of situation of produce shortage”, - Andrey Yarmak, Head of the project “Fruit-Inform” told proUA.
Representatives of companies-importers themselves unwillingly comment the situation, even anonymously. “We don't want to loose a possibility for customs clearance, as it happened, for example, with too talky companies”, - representative of enterprise specializing in imports of fruits told proUA.
“Indicative price is very convenient instrument for customs. It often is fixed according to the most expensive contracts”, - Maria Kolesnik, analyst of consulting agency AAA, told proUA. - “Concerning lemons, the market is very interesting and attractive. Just within January through October of the last year, Ukraine imported lemons for UAH 436 mln (EUR 41.197 mln). By the way, about 80% of imports is performed by private entrepreneurs. It's quite possible that someone decided to reformat market for a certain company.”
At the same time, as it became known to proUA, all fruit business experiences similar problems with overstating customs duties. This results in growing of prices for apples, grapes, and bananas during the last days.
As for bananas, they increased in price by one third to almost UAH 22/kg (EUR 2.08/kg) for the last 2 days. Prices for tangerines and oranges grew by 20% to UAH 25/kg (EUR 2.36/kg) averagely.
“Customs have large arrears under plan of collection to budget. Hence indicative prices for all categories of commodities increase. But we must understand that when indicative prices grow, fines for those who fix them grow too. This leads to increase of prices for fruits in September. Though such growth of prices has never been recorded in September before”, - Sergey Terekhin, Chairman of Committee of Verkhovna Rada for tax and customs policy, told proUA.
Recently, State Customs Service of Ukraine repeatedly stated that increase of indicative prices would make import process more transparent. At that, state budget receives additional incomes. proUA applied to State Customs Service for commentary on emerged situation, but there was no answer yet. We are interested in giving coverage of the office's point of view.
“It's a right of customs to fix indicative prices. Other question is that companies will not lower profitability of their business when increasing costs for imports of produce. As a result, their additional expenditures will be shifted to consumers”, - Maria Kolesnik notes.
“Nowadays, it's very hard to forecast what will be going on with prices. I may tell that demand for lemons increases 2-3 times in October. But not every Ukrainian will be able to afford to buy this product at UAH 30/kg (EUR 2.83/kg)”, - Andrey Yarmak says.