Ukrainian Sectoral Analysis: Food industry
The food industry shows a faster recovery after production declines in 2022. The sector continues to be one of the leaders among manufacturing sectors due to the demand for essential products. However, there are also challenges here - rising raw material costs and export issues due to long wait times at the border.
Sectoral Analysis: Food industry by The Institute for Economic Research and Policy Consulting
The analysis is based on the results of the Special Survey of Enterprises "Export in Wartime", which was conducted by the IER in August 2024. Authors: Yevhen Anhel, Oleksandra Betliy
This report became possible due to the support of the American People through the United States Agency for International Development (USAID) under the Competitive Economy Program in Ukraine.
Executive summary
• Since the beginning of the full-scale war, the food industry has remained one of the leaders in the recovery of production. According to the State Statistics Service of Ukraine, the food industry reduced production in 2022 in response to the war and reduced demand. At the same time, it began to recover rapidly in 2023 and continued to grow significantly in the first quarter of 2024. The industry produces essential products that are in demand even during the war.
• The main impediments to the food industry, as well as to other industries, remain problems with access to electricity, although the industry has coped better with power outages compared to other manufacturing industries. Other impediments include labor shortages and rising prices for raw materials, goods, and supplies. Another challenge is the lack of long orders.
• An important impediment to the operation of the industry is also the lack of labor. That is why the Skills Alliance program, which the government launched together with international partners, is becoming extremely important. The program is designed to introduce training and retraining for the adult population.
• The level of uncertainty remains high. Food companies still have positive expectations for production indicators (production, sales), although since the spring of 2024 there has been a downward trend in optimism
• The industry is one of the country's main exporters. Among the main non-tariff barriers to exports are long queues at the border and long waiting times for export clearance