The city council has finally given in to the Kyiv bakeries’ protests and, on July 18, allowed prices of some types of bread to nearly double.
© UNIAN

The prices shown in this bread kiosk are as stale as yesterday’s bread. After a two-year price freeze, the Kyiv City Council voted to allow breadmakers on July 18 to raise the price of the most popular loaves.

Early on the day of the big price hike, an elderly woman shot to the front of the line in a small bakery, asking for any leftover day-old bread. She was ready to settle for a stale loaf only if she could pay the old price for it. She was too late. A saleswoman told her that pensioners had cleaned the shelves as soon as they heard about the increase.

The city council has finally given in to the Kyiv bakeries’ protests and, on July 18, allowed prices of some types of bread to nearly double.

Officials targeted the so-called “social bread” — three of the cheapest and most popular types. The prices on these loaves have remained frozen since 2006, making Kyiv’s bread artificially cheap — the lowest priced in Ukraine.

A popular long white loaf or "baton" is now available for Hr 2.5 ($0.50), instead of the usual Hr 1.68. A dark loaf of "Ukrainsky" you can get for Hr 3 and white "pshenichny" for Hr 2.40.

The new prices are unlikely to bankrupt anyone. But any time the cost increases dramatically of a daily staple—not to mention a revered national symbol—some adjustments are required.

Cashiers in the same bakery at Independence Square confronted anger from some of their customers reacting to the new price. But the woman in front of the line only shook her head and left empty-handed. Many pensioners live on a monthly income as low as $100. Buying a loaf of bread each day could cost them $15 per month.

To make low­income households in Kyiv feel less hungry, city officials have decided to increase monthly subsidies. Starting in August, some 400,000 families in Kyiv will get Hr 15 ($3.25) extra with their monthly pensions. People at the bread shop considered the paltry increase to be further humiliation and little help in making ends meet.

The capital’s bread giant, Kyiv Bread, argued that the price hike was long overdue. Head of the company, Ihor Mazurika, said that his factories were grappling with the escalating cost of basic grains and fuel, and that government subsidies were insufficient to cover the rise.

“We are operating with a loss of Hr 18 million ($4 million) per month,” he remarked with a grim face. The chief baker then warned that his business had flour left for five more days only and that one of its factories, in the Kyiv suburb of Brovary, has already been shut down.

Controlling nearly 80 percent of the market in Kyiv and its region, Kyiv Bread is a monopoly with a majority share owned by the city, whose elected representatives are responsible for regulating the price of the simpler types of breads that are most popular with low­income families. The rest of the company is in the private hands of CJSC Fininvestgroup and Garon, Ltd., according to the State Securities Commission. In its June 14 ranking of Ukraine’s richest individuals, Korrespondent magazine identified Ukrainian billionaire Vasyl Khmelnytsky, and his partner Andriy Ivanov, as the two businessmen that “control” Kyiv Bread.

Kyiv Bread refused to identify its shareholder structure, leaving politicians speculating about the company’s links to Kyiv Mayor Leonid Chernovetskiy.

Outside the capital, the pricing situation is different. Provincial authorities have been gradually marking up bread along with other food items. In Kyiv, however, a loaf of bread turned into a political football when Chernovetskiy vowed to freeze prices as he swept into office two years ago. But when bakeries reported losses and threatened to cut production, the City Council responded.

However, Prime Minister Yulia Tymoshenko’s bloc, the second largest faction in the city council, abstained from voting for the increase. Tymoshenko blamed the mayor for spiraling inflation and alluded to his private connections with the bread giant. “I see no grounds for higher bread prices,” she said during a meeting with regional governors.

“I will file an appeal at the Prosecutor General’s Office. There are cases, including with Mr. Chernovetskiy, in which he owns bakeries through affiliated individuals. He and his people leave Kyiv and Kyiv region not only without normal bread prices, but also without bread,” Tymoshenko said.

Heavyweight boxer turned politician in the City Council, Vitaliy Klitchko, has also opposed the increase.

The mayor denied Tymoshenko’s allegations with accusations of his own.

“Yulia Tymoshenko lobbied to change ownership of Kyiv bakeries with the previous mayor, Oleksandr Omelchenko. He and her close business partners became owners of these factories, but today these companies are working properly under control of the Kyiv council,” he said, implying that the prime minster once had a finger in the same pie.

Ivanov is a former city councilman. He and Khmelnytsky were political backers of Tymoshenko in 2006, but later switched, making an alliance with Chernovetskiy’s bloc, political analysts say.

Along with the price hike, Kyiv Bread has secured subsidies of nearly Hr 37 million ($8 million) to compensate production costs in 2007 and the first quarter of 2008. The opposition factions accused the monopoly of securing these subsidies to cover the shortfall they incurred during the election campaign.

Kyiv bakery No. 10, part of Kyiv Bread, waited eagerly for the higher prices.

Dressed in a starched linen robe and a tall white hat, Nina Molotova, vice president for quality, floated around the production floor with as much poise as the stiff cream­colored dough shooting through the pumps. She has seen the bread rise and the industry upgrade for more than 20 years. In her memories, bread was always a venerated food and a national symbol.

For centuries, Ukrainians were strongly attached to their land, and bread was regarded as one of its holiest products. The cult of bread was well­observed in customs and rituals. In wedding ceremonies, instead of a wedding cake, many newlyweds are still treated to a traditional round loaf called korovai, symbolizing the beginning of a new family and its future prosperity. Girls dressed in embroidered costumes still welcome high­profile visitors at airports with bread and salt, a symbolic sign of hospitality and friendship.

But in daily life, the attitude has changed and the status of bread is no longer so lofty, Molotova said.

“Our people stopped valuing bread. They throw it away because it’s cheap,” she said.

Molotova said the price rise is needed to increase salaries at the factory and stop the incessant turnover of workers.

Despite the hardship of higher prices on low­income families, the Kyiv City Council did not try to sweep the whole deal under the rug.

On the day of the unpopular action, local parliamentarians allowed Kyiv Bread to treat them to a wide selection of grain delicacies. Oles Dovhy, secretary from the ruling Chernovetskiy faction, treated his fellow deputies to a baton and a Hr 100 ($21.70) fancy loaf of korovai, with a wheat spike on it, right in the session hall. Other lawmakers were marking the occasion at the table, crumbling bread with expensive sorts of cheese.

The Roman emperors provided bread and circuses for their people. Some Ukrainian people now say that their authorities do the same, only with more emphasis on the circuses.