The Russian authorities have taken measures to curb the rise in consumer prices for socially important goods - sugar, sunflower oil, bread and bakery products.

On Monday, December 14, the head of the Ministry of Economic Development Maxim Reshetnikov told about this at a government meeting.

“Until December 20, agreements will be signed between sugar and sunflower oil producers and retail chains.

The agreements provide for price cuts by manufacturers when supplying to retail chains and for limiting the retail price by federal and regional retail chains.

The agreements will be valid until the end of the first quarter of 2021, ”the minister said.

According to him, the conclusion of agreements will lead to a reduction in the cost of sugar and sunflower oil by the end of 2020.

At the same time, the government announced a number of additional initiatives to stabilize prices in 2021.

Thus, sugar producers will be able to receive soft loans at a rate of 1 to 5% for the purchase of sugar beets for processing.

In addition, it is planned to significantly increase the sown area of ​​agricultural crops - from 924 thousand to 1.05 million hectares.

“According to our forecasts, this will increase the volume of sugar beet by 6.5 million tons compared to the current year.

Thus, the expected harvest is over 40 million tons, and this will ensure the production of at least 6 million tons of sugar even with the lowest yield, taking into account the need of 5.9 million, ”said Minister of Agriculture Dmitry Patrushev.

According to government estimates, the total amount of support for the industry will amount to 2 billion rubles.

At the same time, as expected in the Ministry of Agriculture, as a result of the measures taken, producer prices for sugar will have to drop to 36 rubles per kilogram, and retail prices - to 46 rubles per kilogram.

“If the producers' price does not decrease, we are ready to agree on the abolition of the import duty on cane sugar.

The necessary tools for the prompt implementation of such a decision are available, "Patrushev added.

To stabilize prices for sunflower oil in Russia, from January 2021, an export duty on sunflower seeds will be introduced in the amount of 30%, but not less than € 165 per ton.

The measure will be valid from January 9 to June 30, 2021.

According to the forecast of the Ministry of Agriculture, the proposed initiatives will reduce producer prices for sunflower oil to 95 rubles per liter, and retail prices to 110 rubles.

However, if the goods do not fall in price by December 21, 2020, the authorities will additionally approve the introduction of a duty on the export of sunflower oil.

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The authorities will compensate bakeries for part of the cost of purchasing flour.

A total of 3 billion rubles are planned to be allocated for these purposes.

Moreover, the government will allocate another 4.2 billion rubles to flour mills for the purchase of food wheat.

At the same time, it is planned to introduce a quota mechanism for the export of wheat, barley, corn, rye in the amount of 17.5 million tons from February 15 to June 30, 2021.

For the same period, an export duty on wheat is introduced in the amount of € 25 per ton.

"Prices for milling wheat are planned to be reduced this year to 14 thousand rubles excluding VAT per ton in the central part of Russia and to 13 thousand rubles excluding VAT by the end of February 2021," Dmitry Patrushev said.

Also, the Ministry of Economic Development proposed to reduce the price fluctuation bar for socially significant goods by three times.

As noted by Maxim Reshetnikov, at the moment in Russia there is a government decree, which was adopted back in 2008 and allows, in urgent cases, to set regulated prices for socially significant goods for up to 90 days on the territory of one or several constituent entities.

“The price fluctuation bar is set at 30%.

It is clear that when it was established at the legislative level in 2008, that was enough.

Now, obviously, this is not enough - it is proposed to seriously lower the bar.

To do this, we propose to come up with a change in legislation and give the government the right to set this bar.

And in parallel with this, as soon as such a right will work, set the level of fluctuations in the amount of 10% per month without taking into account seasonal price fluctuations, "- said Reshetnikov.

Tough conversation

Following the meeting, Prime Minister Mikhail Mishustin urged to continue monitoring the situation with prices at all stages - from production to retail chains.

At the same time, the Prime Minister stressed that measures should be taken in a timely manner, and not when the food has already risen in price.

“In this sense, we must do everything to create such a system and response.

It is important that we have all the appropriate tools for this, ”added Mishustin.

Recall that on December 9, Russian President Vladimir Putin criticized the ministers for the rise in food prices and demanded that measures be taken to solve the problem within a week.

During a meeting with members of the government, the head of state urged not to tell fairy tales about the current situation, and drew attention to the fact that the real disposable income of the population fell by 4.3%, and sugar prices rose by more than 71%.

In addition, the Russian leader also noted the rise in prices for vegetable oil (by 23.8%), cereals (19.9%), flour (13%), pasta (10.5%) and bakery (6%) products.

The President called this state of affairs unacceptable and drew attention to the fact that the rise in prices is associated with economic reasons, and not with the coronavirus.

Vladimir Putin stressed that now "the labor market is straining, the number of unemployed is increasing, incomes are falling, and the prices of such goods are growing, regardless of any connection with the pandemic and production."

As a result, the head of state demanded that the government "be more attentive to such things."

Price return

The sharp rise in sugar prices in Russia occurred against the backdrop of an excessively low price of goods in 2019.

This point of view in a conversation with RT was expressed by Georgy Ostapkovich, director of the Center for Market Research at the Institute for Statistical Studies and Economics of Knowledge at the Higher School of Economics.

“In 2019, a record amount of sugar beet was harvested in Russia, which led to an overstocking of the market.

As a result, producers were forced to cut prices in a competitive environment and sell sugar at a loss.

In 2020, farmers have reduced the sown area of ​​sugar beet by 17% to adjust the supply on the market.

At the same time, the total root crop yield decreased, which led to a decrease in the volume of raw materials suitable for sugar production.

As a result, prices rose sharply, ”explained Ostapkovich.

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The rise in the price of socially significant products is partly due to the general rise in world prices for these goods.

Ilya Bereznyuk, managing partner of the Agro & Food Communications agency, told RT about this.

“Sugar and wheat, as well as sunflower seeds, are raw materials that are traded on the exchange.

Therefore, manufacturers are guided by world prices.

In recent years, our country has been actively increasing its policy of exporting the agro-industrial complex, and export depends on world prices.

Accordingly, it is more profitable for farmers to sell products at a global cost, ”Bereznyuk explained.

According to Georgy Ostapkovich, the approved actions of the authorities will help stabilize the cost of a food basket for citizens and thereby help Russians "get through a difficult period more calmly."

According to the expert, in the near future prices for sugar and sunflower oil may return to last year's figures.

The specialist also stressed that bread is a key food product for Russians and its rise in price is painfully perceived by the population.

Against this background, financial support for bakery producers will play a significant role in normalizing prices.

“The funds will allow entrepreneurs to increase their production of goods, which will lead to increased competition in the market and, as a result, lower prices for goods in retail,” Ostapkovich said.

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In addition, the emerging strengthening of the ruble can play in favor of lower prices for socially important goods, says Andrey Sizov, Managing Director of the Sovekon analytical agency.

Note that the Russian currency has been growing steadily since the beginning of November.

Thus, over the past month and a half, the dollar rate on the Moscow Exchange has dropped from 80-81 to 72-73 rubles, and the euro rate - from 93-94 to 88-89 rubles.

“Prices may also decline due to changes in the external environment as a result of the strengthening of the ruble.

Wholesale sugar prices have been declining for several weeks due to the same factors.

Accordingly, in the not too distant future, we would see stabilization, or even a drop in retail prices, ”concluded Sizov.