The large US food conglomerate admitted that rising raw commodity costs are making it harder to make money as the company facing stiff competition is not able to pass on all increased costs to consumers. Last December the company raised prices, mirroring many other food makers, including General Mills Inc., all of whom are dealing with rising prices for corn, wheat and other ingredients. CEO Gary Rodkin said during a conference call that he expects rising costs will continue, with the company raising prices as needed. "We have developed realistic plans to deal with difficult conditions," he said. Yesterday the company reported net income of $214.8 million, or 50 cents per share, for the period ended Feb. 27. That's down from $229.6 million, or 51 cents per share, a year earlier. Earnings from continuing operations rose to 50 cents per share from 49 cents per share.

Conagra prices to consumers did not increase because they were worried about losing market share to competitors. In Ukraine the government forces companies to control prices because there is limited competition due to a bad business climate. Clearly the Ukrainian government should take the Conagra lesson to heart, improve the business climate and stay out of price controls.

UkrAgroConsult