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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Bread "Provocation"

8 June, 1999 - 00:00

President takes aim at enterprises

By Vitaly KNIAZHANSKY, The Day
Ukrainian President Leonid Kuchma has called price increases on sugar,
flour, and meal in some regions "speculation and a provocation." In his
words, the price hikes on such basic food products "was done to profit
some businessmen and the base political forces that helped them to do so,"
reports Interfax-Ukraine.

The Day's correspondent turned to the commercial director of
Mezokred Co., Serhiy Boryshchenko, asking whether it is possible to make
money today on food products, what is happening in general, and where this
might lead.

S. Boryshchenko: "Our firm trades in food products but, frankly,
you can't make money on them today. I think that the steps official organs
have taken to solve food supply problems will most likely backfire. With
state regulation of sugar prices the wholesale price is already above the
retail one. And today in general retail trade is very risky unless one
has very good connections with certain organs. I greatly doubt that one
can make money in this area, especially on flour and pasta products. Today
flour has seen a big jump in price, and very many producers do not want
to deal with lower grade products and making raw macaroni is losing its
image. And where is all that flour and meal disappearing to? To Russia,
I suspect."

The department of Naftohaz Ukrayiny (Oil & Gas of Ukraine) for natural
gas imports and settling accounts with the Russian Federation confirmed
as much: payment in commodities is going at full steam, while declining
to cite specific figures. Thus it is difficult to agree with President
Kuchma that "there are no economic grounds for this" (price rises - Ed.).
Any schoolchild knows that when market supply falls, prices rise. And in
this case the easiest thing to do it to blame "the base political forces
that helped do this." Under such circumstances they include the President
himself by leaving the impression that its basis is the pseudo-market situation
in the economy, including the inability to pay, a situation for which he
and the government he appointed bear responsibility.

INCIDENTALLY

As long as Ukraine fails to set up a system of state regulation of the
market, there is no certainty that the country will not have a repetition
of the May volatility in food prices, stated Oleksandr ZAVADA, chairman
of Ukraine's Anti-Monopoly Committee on June 2.

The Ukrainian market, he said, has already gone through a number of
tremors similar to the May sugar fluctuations. In 1997 there was a similar
situation with gasoline, in 1998 with oil, and so on. And each time they
are met with unprofessional official steps to counter processes, the "professional
ignorance" of the persons responsible, ungrounded regulation of prices
by local authorities, and attempts to artificially segment the nationwide
market into local markets, leading to the creation of artificial monopolists.

 

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