It is extremely useful, especially for the real sector of the economy of entrepreneurs, an interview with the head of open stock company Kyivkhlib Volodymyr Chereda. Demanding, but fair leader who deeply understands not only his business but also global problems of the state, which, in his opinion, has a direct impact on the development of enterprises and individuals, and business processes in general.
Kyivkhlib has been working on the Ukrainian market since 1930, and it is one of the most famous producers of bread in the capital and the region. There are nine productions in the company which employs more than 4,000 people. Since 2009 Volodymyr Viktorovych Chereda in the post of chairman of the board has been determining the strategy of development of the joint-stock company. A leader who sees the main problem of Ukraine in the absence of dialogue between government and business, which management is aimed at achieving global standards of product quality, prefers to work on the conscience, advises to work over yourself, “earning” a reputation for enterprise exclusively with quality products and the fulfillment of the promises.
LDaily: Volodymyr Viktorovych, tell us with what indices , does Kyivkhlib, as the leader of the bakery market of Ukraine, complete a year?
V. Chereda: If compare to 2015 then we have more higher finance indexation, but if evaluate from the perspective of the strategy for five years, the situation has worsened. Unfortunately, in Ukraine the direction of production, which produces baked goods, is not in the economic plane, but in political. It so happened that in our society bread and the price of bread became a bargaining chip and the policy makes use of it. Men assured, if the bread will cost as much as it really should cost, then come to an end. People were assured that if the bread would cost such a price, as it really should cost, then the end of the world will come.
LDaily: Explain what constitutes the price of bread?
V. Chereda: To date, the price of bread is directly depends on the exchange rate, not only on the quantity of the harvest, as experts often say. I am sure that every Ukrainian pleased to hear that the country harvested a record grain, which means that the reasons for the revision of the price of bread do not exist. But for some reason no one voiced how much is collected, for example, wheat or rye. It is usually indicates only the overall figure.
In addition, in Ukraine had been working a resolution on the regulation of prices for food products by local authorities from 1996 till October, 2016. Our company, as well as others, had to produce bread either with zero profitability or negative. And there were no any compensatory mechanisms. And only this year the private companies obtained a right to regulate prices independently. By the way, state regulation is one of the reasons why foreign investors did not go to Ukraine.
LDaily: How do you assess the talk of a promising industry in our country such as the agricultural sector, it is said that investors are looking at it with a great interest?
V. Chereda: We should
correctly understand the investor’s interest: to grow crops for export and export them. But for the country it does not mean any good thing, because we are treated only as a raw material appendage
In fact, investors are reluctant to invest in the processing and sale of the final product of the grain. And I know why: those who are in power, they do not believe in the prospect of Ukraine and also do not plan to invest in its funds. For some reason it is hushed up the information that Ukrainian grain is processed on the world markets, but not in Ukraine …
In addition, the price on grain is formed in the port and from 64 million tons of grain the domestic market consumes at the average only 8 million tons. Thus, export-oriented capacity dictates the price on the domestic market. For example, wheat in December, 2015 was worth 3,900 UAH, now it costs 4350 UAH. Rye, which is not a cash crop and has a low yield, fell into the category of unpromising cultures and in Ukraine it is not enough for the market, and flour, in turn, increased by 30%. So how do you think do we have a reason to revise the price on bread? Perhaps the answer is the affirmative only.
Price movement on main constituents of cost price
Price for 1ton with MPE, UAH
% of rate
Other raw material
|Turnsole oil||21 840||23 460||7,4%|
|Yeast||7 740||8 280||7,0%|
|Sault||1 392||1 632||17,2%|
|Transport per 1 ton of carried production ,UAH||943,04||1 098,88||16,5%|
|Rock gas for 1thous. cubic meter, UAH (7000 UAH in December, 2016)||7 000,00||8 844,24||26,3%|
|Electrical energy for 1 kilowatt, UAH||1,8250||2,3639||29,5%|
|Minimal salary (1600 UAH from December, 2016)||1 378||1 600||16,1%|
LDaily: Why, in your opinion, in Ukraine are not taking place the necessary economic reforms?
V. Chereda: Our problem is that the government is not trying to build a dialogue with the business. I emphasize again that this is the main reason why investors do not want to go. I draw your attention to the fact that over 25 years of Ukraine’s independence the authorities have done nothing to improve the situation. Here is an example, if the bread kneaded in the bad leaven, it will turn bad. So we have: in 1991 was a bad starter, and such a bread we eat today. That is my personal position.
LDaily: And yet, despite the lack of dialogue between government and business, new companies emerge in Ukraine. How?
V. Chereda: Yes, really open, but the major companies are not in Ukraine, and so the money we do not remain, and there are only cheap jobs.
LDaily: You argue about the need in dialogue with the authorities. But politics and business – is not it compatible things?
V. Chereda: Unfortunately, these things can not break into our country. Often policies are lobbying for their own business interests. And as long as the person begins to work consciously for the benefit of the country, the situation will not improve.
LDaily: What would you advise in this situation? What methods do you think can be resuscitation?
V. Chereda: I believe that we need to form a market price regulation and transparent rules of the game. To date, we have 40% of the bread produced with the companies operating on the common system of taxation, and 60% – under the simplified. In my opinion, should be the same rules of the game in order to generate the same costs. There should be a model of dialogue between business and government, we must learn to listen to each other and work to agree on market regulation. Then will work even contradictory laws.
LDaily: In what countries do Kyivkhlib export its products?
V. Chereda: We ship our products to Europe, the US, Canada, Central Asia and Israel. Now we began to negotiate with China, but the fact is that the only way to product delivery – through Russia, that is why we do not cooperate with China, however, consider this country as a strategic partner. Some partners are officially our distributors in Europe: we send them frozen products, such as cakes, and they deliver them to Europe independently. In the future we are also planning to export frozen bread.
LDaily: How is the Ukrainian product evaluated in Europe?
V. Chereda: In Europe, the GATS does not exist, so they do not understand their meaning. Typically, Europeans are asking product data sheet with certain technical regulations, which guarantees the safety of the consumer. And, believe me, to earn credibility with consumers the manufacturer may only high-quality and safe products. And Kyivkhlib is working all the time on it. Although not all Ukrainian producers maintain quality standards and it is also one of our problems.
LDaily: Do you participate in person, or maybe other representatives affiliate with Kyivkhlib in the legislative regulation of food safety?
V. Chereda: Partly as chairman of the State TC 153 Bread and pasta. Together with colleagues we write professional comments. For example, I now I have a discussion with the Technical Committee for the confectionery industry, in particular the cocoa percentage in the chocolate: I insist on the fact that the chocolate must contain at least 65%, however, many people are satisfied with 25%, but we continue to fight.
Also, we suggest that some aspects of regulatory policy should be given to associations and I think this is correct, because
associations are non-profit organizations, and they provide an opportunity for all companies in this segment to be identified and to develop a quality standard, which should be tested by departmental committee. I think it is fair
By the way, as part of our Association (Ukrainian Bakers Association) there are foreign companies, which have their own development and its own technical standards. These trade agencies, and this cooperation is very important for us, because it gives the opportunity to use our organization as a platform to bring our information. And we, in turn, have the opportunity to learn about how to develop the European market.