The rise in price of food remains on the agenda of all Russians. The coronavirus pandemic does not slow down, and willy-nilly consumers think: is there enough food for everyone. What products can rise in price in the first place, whether we run into shortages and whether a plan is likely to distribute food to the poor — we talked about this with Sergey Lisovsky, the first deputy chairman of the Federation Council Committee on Agrarian Food Policy and Environmental Management.
— How prepared is the Russian food market for the current abnormal situation?
— For the first time they started talking about creating modern agriculture in 1999. However, in 2000, the Ministry of Economic Development doubted the need to develop domestic agribusiness. The ministry said that we do not need our own bird: we can buy and bring everything we need, and we have money. Some officials adhered to this position until 2010. Only then did they finally realize that we needed our production of products.
A lot of work has been done over the years, and now we are ready to independently provide the country with food. State national projects helped a lot. They gave a big impetus to the development of agriculture. Even with little financial support compared to investments in agribusiness in other countries, enterprises could improve. And at present, the Russian agrarian sector has become one of the engines of the domestic economy.
— Statistics record the increase in prices for products, including socially significant ones, during the spread of coronavirus infection, as well as the fall of oil and the ruble. Is this an inevitable evil?
— In fact, manufacturers’ prices practically do not rise. Moreover, there are large producers, such as meat products, who are ready to make a discount on their goods for the period of a pandemic. At the same time, they are confident that retail chains will not bring this discount to consumers. All concessions to landowners will go to retailers. In Russia, unfortunately, there is no mechanism allowing direct discounts to consumers.
It should be understood that, despite the development of domestic agriculture, we remain in serious dependence from the point of view of technology. More than half of all equipment and production lines is import. Western partners trade with us for dollars and euros. It turns out that today’s increase in production costs provokes a low rate of the national currency.
There is another factor in price increases on the shelves. During the time that Russian officials discussed the need to support agriculture, our specialists lagged behind in the development of genetics, animal breeding, as well as in seed production and breeding. As a result, for many types, for example, fruits and vegetables, we are very dependent on imports, which grew in value due to the fall of the ruble.
If we take the vegetable group, then the supply of such goods during the off-season (April-July) mainly came from Egypt, as well as Iran and Turkey. Egypt and Turkey temporarily suspended exports. Tajikistan and Uzbekistan remained, from where they came to Russia, including potatoes and onions.
However, Kazakhstan stood in the way of supplies. The country blocks the transit of goods through its territory. Today, deliveries are underway, but logistics has become more complicated, which also affects the cost of goods for the consumer. For this reason, onions can grow in price by two to three times. Potatoes are also at risk.
But first of all, food inflation will depend on the exchange rate of the national currency.
— How much did the consumer hype on buckwheat and some other products that was observed at the beginning of the self-isolation regime influence the current increase in the cost of products?
— Any excitement affects the value of the goods. In any country and at all times there have been and remain speculators who want to cash in on consumer panic. Meanwhile, genetic memory lives in the Russians: war, years of total deficit, and stocks of long-term storage products. Meanwhile, while Muscovites bought up expensive buckwheat in stores, in the Altai Territory they did not know where to put the amount of cereal that they have.
It is believed that the market is able to regulate itself. However, the growth in demand always provokes a rise in price of products, and the state is obliged to fulfill the function of a powerful regulator in such a sensitive social food market. Unfortunately, such a mechanism has not yet been developed.
— How do you feel about the initiative of manufacturers, suppliers and retailers about the need to introduce food cards for the poor?
— The possibility of introducing food cards was discussed back in 2009. Based on similar systems that exist in Europe and the USA, we developed our project. However, the initiative had many opponents. Opponents insisted that the phrase “food cards” is associated with difficult times among Russians. And counterarguments like the fact that the «card» is just a word that does not evoke such negative memories when people pay it, did not work.
At the same time, such cards are not only support for low-income citizens, but also domestic producers within the WTO. For example, Europe and the USA are actively using this opportunity. But, unfortunately, we have not yet succeeded in breaking through the initiative.
It is noteworthy that work on this program was entrusted not to the Ministry of Agriculture, which would be natural, but to the Ministry of Industry and Trade, which, having listened to the opinions of retail chains, “laid a paw” on this program and proposed the option of distributing food through the retailers themselves.
Then it was planned to spend about 300 billion rubles on the implementation of the project. Meanwhile, the average trading margin of networks is 50%. It turns out that retailers, having provided a shelf in their stores for distributing products, would automatically receive half of 300 billion. This is wrong. Other methods for distributing products have been proposed.
Suppose there are 3-4 large producers of vegetable oil and 5-6 producers of sugar in the country. It is necessary to conclude contracts with them for direct deliveries. Distribution should not go through distribution networks, but through other implementation systems. For example, it is possible to deliver food products to the poor even in remote regions by mail.
As soon as the retail chains and the Ministry of Industry and Trade realized that the project was getting out of their control, it was frozen.
Recent statements about the need to introduce grocery cards — this is the third attempt to implement the project. Unfortunately, now such an initiative is aimed at supporting retailers at the expense of the budget, under the guise of socially significant motives.
— If the food aid program for the poor is implemented, is it worth adding to the list of needy those Russians who lost their income due to the coronavirus pandemic?
— There is no difficulty. But the problem is that the state, trying not to randomly allocate funds to those who are not too much in need, creates serious obstacles in distributing aid in principle. Therefore, many social programs die out before they even start.
I’ll tell you about the example of small and medium-sized businesses, to which the government promised to issue interest-free loans. I talked with many manufacturers who said that they did not receive such assistance. They submitted applications, but they were not even told if they would receive the money in principle. Officials from federal ministries are not in a hurry to get the president.
In my opinion, it’s better to “lose” money and allocate help to those who do not really need it, and there are no more than 8%, but at the same time simplify the procedure for obtaining these for the poor.
— Can consumers face a real shortage of products? Are there any types of food that are at risk for us?
— In the coming year, there will certainly not be a shortage of food in stores. At the same time, processors faced a serious problem. There are already examples where the illness of one employee led to a halt in the entire production due to quarantine measures.
One large enterprise was forced to quarantine 135 people. But the leadership is faced with the fact that from the side of state structures there is no clear wording of what the quarantine group is, and who pays for the compelled sick leave and how it is made out. All appeals to government agencies ended with the words: «see information on the site.»
It got ridiculous. The representative of the Ministry of Agriculture decided to call all authorities and get answers, without introducing herself. Nothing came of it. She was also sent from site to site.
It turned out that the bureaucracy does not allow the state to make decisions quickly, it inhibits the efficient operation of industries that can suspend the production of socially significant products. And for such inaction no one is responsible.
— Retail chains do not have time to sell products that they bought in March during the period of rush demand. As a result, they have to destroy perishable products at their own expense. Handing out food to the needy is not permitted by law.
Do you support the initiative of retail chains — to give food as charity to nursing homes and other organizations involved in the distribution of assistance to those in need? Do you consider it necessary to allow them to distribute food at least at the time of a pandemic?
— There are some sharp points.
Firstly, often, the problem of utilization of goods with almost expired shelf life they want to transfer to retail chains to manufacturers. Retailers are trying to transfer to manufacturers the obligation to export and destroy such products in order to avoid costs. If the manufacturer refuses to meet the distribution network, retailers begin to threaten to terminate the supply contract.
Another problem is tax. Often, tax authorities do not allow retailers to count such a write-off of goods at a loss. They believe that if retailers distribute products to the poor, then this should be done out of profit. Thus, profit tax is charged on this charity.
The problem is not new. The tax authorities were previously afraid that unscrupulous retail chains would derive part of the profits from such profits. But now, in a pandemic, releasing retailers from such a burden could help those in need. This problem must be solved now. But it is important to prevent the distribution of products with an expired shelf life.
— How does the state in the current conditions help the agro-industrial complex? Are these measures enough?
— We must pay tribute to the Ministry of Agriculture, which is very quickly involved in the work. Almost all the amounts that were budgeted, the agrarian department is ready to provide and brought to the regions. Loans for the sowing campaign and working capital were promptly issued. Everything was implemented quickly enough.
Often there are problems in the regions. 18 regions have not yet prepared a regulation for receiving compensating and stimulating subsidies from the federal budget. If the regulation is not adopted by the regional government, then agricultural producers cannot receive support. In this case, the regions themselves should be more operational.
Now the Ministry of Agriculture is very actively introducing effective practices during the quarantine period. There are enterprises that can be said to be creative in protecting their production. For example, confectioners dispersed jobs, established transparent partitions between employees. There are production facilities that have agreed with their employees and organized temporary dormitories. Work is carried out on a rotational basis. And such practices apply throughout the country.
— What damage can an economic crisis inflict on Russian farmers caused by an epidemic and a fall in the national currency?
— It all depends on the duration of the crisis. The ruble has fallen before, but this is the first pandemic and massive self-isolation.
I can assume that in some ways this will even help Russian farmers. Now all manufacturers began to look at their expenses differently and calculate the cost of goods differently. Employers also realized the importance of having qualified staff. In crisis conditions, only professionals in their field can save the situation.
If quarantine ends soon, such an experience will only strengthen Russian agriculture. Most importantly, now absolutely everyone has realized how to develop the industry. Only in this case, you can be sure that citizens will never be left without food.
