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Ukraine's Roshen suspends confectionery supplies to Russia

July 31, 2013, 16:48 UTC+3

On Monday, Russia’s Rospotrebnadzor consumer rights watchdog banned exports of confectionery from Roshen’s Ukrainian confectionery works to Russia

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Photo ITAR-TASS/Artyom Korotaev

Photo ITAR-TASS/Artyom Korotaev

KIEV, July 31 (Itar-Tass) - Ukraine’s Roshen Corporation has suspended all confectionery supplies to Russia, the press service of the corporation reported on Wednesday. “The corporation has suspended all shipments until the situation becomes clear,” the report said.

On Monday, Russia’s Rospotrebnadzor consumer rights watchdog banned exports of confectionery from Roshen’s Ukrainian confectionery works to Russia. It said the ban came as a result of the violation of demands to the quality and safety of products.

At the same time the press service of the Ukrainian Ministry for Economic Development said Ukraine was launching consultations with Russia over the ban on Roshen products. “Ukraine’s moves will be rather quick, as this situation affects the interests of over 8,000 workers of our enterprises. It may also tell on export surplus, and lessen tax deductions at all levels,” the press service quotes Ukrainian Minister for Economic Development and Trade Igor Prasolov as saying.

He said consultations will be held with the Russian side, Ukraine will make an inquiry, will study official results of the expertise and will negotiate inspections of Rosotrebnadzor specialists to Ukrainian enterprises . “The resumption of exports of Ukrainian products to the Russian market will be considered on inspection results,” Prasolov said. “Our specialists are ready to go to Moscow for negotiations any time, as soon as we agree with the Russian side,” he added.

The Association of the Ukrainian Confectionery Industry has calculated that the ban on Roshen production in Russia will trigger the loss of currency receipts for Ukraine at about 17 million dollars a month. Ukraine will monthly miss up to 13 million hrivnas (about 1.5 million dollars) in taxes on profit, individual income taxes and the universal social charge. Potentially lost investments because of the ban may amount to the equivalent of five million dollars a year.

The Ukrainian Confectionery Industry urges the Ukrainian government to consider together with Russia a procedure to settle the problem without trade bans, the Association said in its report.

Specialists in Ukraine also believe that administrative bans by Russia may trigger the setting up of artificial barriers in mutual trade.

Roshen Corporation is the leading company in Ukraine and one of the key world producers. It incorporates four Ukrainian confectioneries (the Kiev, Vinnitsa, Mariupol and Kremenchug ones), the Lipetsk confectionery factory (Russia), the Klaipeda confectionery factory (Lithuania), Bonbonetti Choco Kft (Hungary), as well as the Bershadmoloko butter and milk plant. Roshen produces about 200 types of confectioneries. The total amount reaches 450,000 tonnes. Products are supplied to Russia, Kazakhstan, Belarus, Moldova, Central Asia, Germany, the United States, Israel, Lithuania and other states.

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