Confectionery industry problems are tackled by old means – with import restrictions

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April 22, 2016 18:29

As of April 3rd, Ukrainian confectionery manufacturers cannot access the Belarusian market.

Income growth has resulted in Belarusian consumers’ reorientation towards foreign confectionery producers. The government attempts to solve the problem of reduced production volumes and piling up stocks in the confectionery industry by restricting domestic market competition. Instead of improving the quality, the government uses administrative means, which are ineffective given border free communications with Russia.

Income growth has resulted in Belarusian consumers’ reorientation towards foreign confectionery producers. According to the National Statistics Committee data, in Q1 2013, the share of confectionery made from foreign sugar increased up to 29.8% of all sales. In Q1 2012 the share of foreign products was 21.6%. Foreign trade in goods statistics in January-February 2013 shows a more than twofold increase in imports of chocolate and other food products containing cocoa.

Confectionery industry statistics also deteriorated. Production of chocolate and confectionery products from chocolate declined in Q1 2013 by 17.6% compared to the same period in 2012. Stocks increased by 20% since early 2013. A negative impact on the confectionery industry performance has had the nationalization of Kommunarka and Spartak confectioneries and the need to restructure the foreign sales network. The government decided to support the domestic confectioneries by limiting the supply from Ukraine – one of the largest confectionery suppliers to the Belarusian market. Restrictions on Ukrainian confectionery imports were introduced on formal grounds.

An additional measure to improve the situation in the confectionery industry is a Trade Ministry resolution No 6, which extended the list of sweets that must be sold in retail outlets. Against import restrictions, Belarusian shops will be overloaded with domestic confectionary products. This measure’s effectiveness is questionable in the context of open borders with Russia and the inability to apply similar measures against Russian confectioners, which are leading importers to Belarus in 2013.

Thus, instead of improving the quality, the government has once again used its administrative tool. Preservation of favourable conditions for Belarusian producers by using old means is not feasible due to open borders within the Common Economic Space. In fact, the launched unproductive trade war could result in retaliatory actions by Ukrain for a number of highly sensitive Belarusian exports.

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