On March 1, the Ministry of Agriculture begins massive grain interventions designed to maintain prices for beef and pork. However, the measures are clearly too late, experts say. In the spring, especially in private farmsteads, the growth of cattle and the farrowing of pigs begin, which will lead to higher prices for grain and, accordingly, meat. If Russian farmers do not create a powerful lobby, then many farmers will soon go bankrupt under the pressure of foreign competitors after Russia joins the WTO.
The other day, Dmitry Medvedev held a large meeting on issues of the agricultural sector. In addition to officials from the Ministry of Agriculture, other departments and manufacturers, a number of governors were invited to attend. According to one of the meeting participants, “a quiet, fierce rage settled on the 5th floor of the White House that day.” The prime minister was clearly not ready for it.
According to national project Development of Agriculture, which was once supervised by the current Prime Minister, about 250 billion budget rubles were spent on the development of industrial pig farming. In accordance with the requirements of the WTO, and we de facto became its participants on August 23, import duties on pork meat were reduced from 15% to 0, and on live pigs - from 40% to 5%. Against the backdrop of an unprecedented rise in prices for feed grain, the situation for domestic pig farmers has become simply fatal.
It couldn't have been any other way. In the structure of the cost of 1 kg of pork, about 70% is the grain group. Approximately the same ratio is found in poultry meat. It is in these livestock sectors, which have demonstrated the most impressive import substitution over the past 10 years, that we will face a serious decline. At the same time, the measures taken urgently by the government will help our agriculture like vitamins help a dead mongrel.
And that's why. Firstly, the fire zeroing of the import duty on grain, which is 5%, will not be effective, since it mainly concerns supplies from the European Union and Kazakhstan. This means that you can’t count on large volumes of it. This should also include the widely announced decision by the Ministry of Agriculture to begin massive commodity interventions in the amount of 3 million tons from March 1. I have doubts about the presence of such a quantity of grain in the fund, and also raises the question of its safety.
Secondly, logistics are questionable. It is unlikely that it will be possible to quickly ship and transport such volumes of grain, which is 50 thousand wagons, with the average speed of cargo movement on Russian Railways being 9 km/h.
The situation will be aggravated by the fact that there are biological cycles in animal husbandry. You can't fool nature. It is in the spring months that the mass growth of cattle and farrowing of pigs begins, especially in private farmsteads, which means that the demand for grains will increase. I give a disappointing forecast: having slowed down slightly in the second half of May, domestic prices for feed grain will exceed world prices by 10-15%.
I would also include the treatment of the poor dog with vitamins as shameful attempts to limit imports, citing the use of ractopamine by overseas producers when fattening pigs. There is a feed additive that allows pigs to quickly develop beloved by brothers Ukrainians prefer fat, but muscle mass. As a fan of organic products, I generally welcome the sanctions. However, we will not be able to protect domestic producers in this way. I have experience. In March 1996, I was the chief negotiator during the first “chicken war” with “Bush’s legs,” so I am well acquainted with the arsenal of our American and Canadian partners and their counterarguments.
Please note that at that time we were not members of the WTO and could afford to freely “walk” for some time around the “foreign policy buffet”. Now there are no such opportunities. I foresee that within six months our partners will remove from the diets of farm animals and poultry all feed additives that do not suit the Russian supervisory authorities. Then our inspectors will be invited, and we will have nothing to cover. And then what - a trade war? Russia needs her like a “bride.”
But there are also internal, purely economic reasons why this ban on imported meat will not last long. The structure of consumer inflation is such that out of Rosstat’s estimated 7%, 4.5%, or even 5%, comes from rising prices specifically for the food basket. And 35-50% of household expenses are spent on food. Agree, these data are very different from 10% American and 12-15% European.
From July 1, it was announced that tariffs would increase by an average of 15%. Against this background, inflation expectations are growing, which means that many producers and traders, in turn, will raise food prices.
So such methods of protecting domestic producers are fraught with serious social consequences. And there is no need to point our finger at our WTO membership. It's just a tool, and a double-edged one. The point is the catastrophic discrepancy between the state of Russian state institutions and the modern requirements of the global trade organization, the archaic and sluggish nature of the entire system of state power. This is the main root of our troubles and problems. During long and painful negotiations, Russia agreed on the amount of aggregate support for the sector in the amount of $9 billion. About $5 billion was spent under the “Agriculture” budget section in 2012. It would seem that there is nothing to worry about, we have room to grow.
In my opinion, budget support should concern programs related to increasing domestic demand. But this is where there is a shortage of ideas and proposals from the Government of the Russian Federation. Number of so-called decreed contingents and organized groups (schools, kindergartens, social care institutions, medical hospitals) number about 32 million people, who annually require 11 million tons of products worth 640 billion rubles. I’ll be honest: indexation and increasing pensions in the amount of 600 rubles are much less effective than targeted food assistance. Because in this way, in addition to social problems the main problem of agricultural producers - sales - is being solved. And if we add to them federal special consumers, for example the Ministry of Defense, the Penitentiary System, the State Reserve, etc., then, according to my estimates, 30-35% of domestic production can be guaranteed to be provided by effective demand from the state. In any case, such programs have been operating successfully for a long time in a number of developed countries, and especially in the USA.
Separately, I would like to say about the high volatility of prices for agricultural raw materials with a wide variation between years. When there is a large harvest, the crop growing industry becomes poor, and when the harvest is low, like last year, the livestock sector experiences serious problems. Ultimately the consumer suffers.
The price pendulum passes the equilibrium point at the highest speed - obviously, it can be fixed by a system of commodity and purchasing interventions. In a number of countries, special structures have been created to effectively regulate agri-food markets. Obviously, there is a need to create such a department in our country. It could effectively implement intervention policies in agri-food markets not only in relation to grain, but also for a number of exchange goods that significantly affect the cost of the entire food basket. In my opinion, such a department should be subordinated not to a line ministry, but to the Government of the Russian Federation.
In Russia, the level of food inflation in 2016 will decrease to 9%. This was the forecast made by those surveyed" Russian newspaper" experts, suggesting how inflation will affect the prices of various food products.
In the coming year, the entire meat market will expect an increase in the production of domestic products, notes Elena Tyurina, director of the Institute of Agricultural Marketing (IAM). The expert claims that retail prices for pork and poultry may go down by 2-4 percent.
Beef prices increased by an average of 20 percent in 2015. This type of meat is confidently moving into the category of products for people with above-average incomes.
Manufacturers are increasingly focusing on “expensive” presentation. For example, steaks. More often the population buys pork and poultry. Such an increase in prices, as in 2015, according to the expert, indicates that the manufacturer understands that the production volume does not meet the needs, Tyurina reflects. “In 2016, beef will rise in price much faster than pork and poultry. Hardly by 20 percent, but 12-15 percent can be expected,” she predicts.
At the same time, the executive director of the analytical agency SovEkon, Andrei Sizov, in his study “Russian agriculture is an oasis of growth in a depressed economy. Results of 2015,” emphasizes that the dynamics of poultry and pork production began to deteriorate at the end of 2015. First of all, due to reduced consumption by the population. If this trend continues to develop, prices may rise.
Potato producers reduced prices for their products in 2015. Their products cost on average 16 percent less than a year earlier. This is due, firstly, to a good harvest in 2015, and secondly, to an increase in the number of vegetable storage facilities. Many farms have acquired them. But, alas, not all. Therefore, in the remaining winter months, potatoes will become more expensive. The acute shortage of storage capacity has long been a major problem. Russian market.
In conditions where it is impossible to preserve the harvest, farms have to sell most of their products during the harvesting period, which greatly “drops” prices on the market. With the onset of cold weather, as improperly stored potatoes begin to deteriorate, prices begin to rise.
For other vegetables, the process is not so obvious. The production of greenhouse vegetables increased by 8-10 percent, according to the Institute of Agricultural Marketing. This is the result of the construction of the first stages of greenhouse complexes almost throughout the country. For 2016, approximately 40 projects for the production of greenhouse vegetables have been announced, which allows us to predict an increase in production by another 20 percent in 2016. And this allows us to count on a reduction in price increases.
According to IAM forecasts, in 2016 the dynamics of prices for the dairy group will remain the same as last year. These products cause the greatest concern among experts. Despite growing investments in the industry, the number of dairy cattle in Russia is declining, and the level of provision of producers with natural raw materials remains low. The average price increase in the dairy industry is projected to be 3-5 percent. True, manufacturers will be more severely limited by decreased consumer demand. So butter It is unlikely that the price will rise by more than 7 percent. Otherwise, buyers will begin to refuse it, Tyurina predicts.
Dairy market expert Marina Petrova notes a decrease in consumption for all groups of dairy products in 2015. From 1.2 percent for fermented milk products to 13-15 percent for cheese. In 2016, the trend will continue, she expects. In addition, experts predict that after appearing in dairy products with added palm oil With special labeling, prices for goods without vegetable fats will go up.
There is a high probability of a significant expansion of the range of such products. According to Elena Tyurina, the main problem of the dairy industry remains the lack of an established mechanism for purchasing raw milk from small farms that occupy a significant share of total production. The number of factories with raw materials at their disposal remains insignificant.
Text: Anastasia MOSKVINA
Photo: Ilya DAVYDOV / E1.RU
Pork is getting cheaper, beef is not
In 2016, the entire meat market will expect an increase in the production of domestic products, says Elena Tyurina, director of the Institute of Agricultural Marketing (IAM). The expert claims that retail prices for pork and poultry may go down by 2-4 percent.
For now, Russian companies are heavily dependent on imports of animal feed and nutritional supplements. Although their production is now beginning to be mastered in Russia.
Beef prices increased by an average of 20 percent in 2015. This type of meat is confidently moving into the category of products for people with above-average incomes. Manufacturers are increasingly focusing on “expensive” presentation. For example, steaks.
Beef consumption remains significantly lower compared to pork and poultry. Such a rise in prices, as in 2015, suggests that the manufacturer understands that production volume does not meet the needs, Tyurina thinks. “In 2016, beef will rise in price much faster than pork and poultry. Hardly by 20 percent, but 12-15 percent can be expected,” she predicts.
At the same time, Andrei Sizov, executive director of the analytical agency SovEkon, in his study “Russian agriculture - an oasis of growth in a depressed economy. Results of 2015” emphasizes that the dynamics of poultry and pork production began to deteriorate at the end of 2015.
First of all, by reducing consumption by the population. If this trend continues to develop, prices may rise.
Potatoes become more expensive due to frost
Potato producers reduced prices for their products in 2015. Their products cost on average 16 percent less than a year earlier.
This is due, firstly, to a good harvest in 2015, and secondly, to an increase in the number of vegetable storage facilities. Many farms have acquired them. But, alas, not all. Therefore, in the remaining winter months, potatoes will become more expensive.
An acute shortage of storage capacity has long been a big problem in the Russian market. In conditions where it is impossible to preserve the harvest, farms have to sell most of their products during the harvesting period, which greatly “drops” prices on the market. With the onset of cold weather, as improperly stored potatoes begin to deteriorate, prices begin to rise.
For other vegetables, the process is not so obvious. Although there are successes here too. The production of greenhouse vegetables increased by 8-10 percent, according to the Institute of Agricultural Marketing. This is the result of the construction of the first stages of greenhouse complexes almost throughout the country. For 2016, approximately 40 projects for the production of greenhouse vegetables have been announced, which allows us to predict an increase in production by approximately another 20 percent in 2016. And this allows us to count on a reduction in price increases.
Milk is in short supply
According to IAM forecasts, in 2016 the dynamics of prices for the dairy group will remain the same as last year.
These products cause the greatest concern among experts. Despite growing investments in the industry, the number of dairy cattle in Russia is declining, and the level of provision of producers with natural raw materials remains low.
The average price increase in the dairy industry is projected to be 3-5 percent. True, manufacturers will be more severely limited by decreased consumer demand. So butter is unlikely to rise in price by more than 7 percent. Otherwise, buyers will begin to refuse it, Tyurina predicts.
Dairy market expert Marina Petrova (Petrova Five Consulting) notes a decrease in consumption for all groups of dairy products in 2015. From 1.2 percent for fermented milk products to 13-15 percent for cheese. In 2016, the trend will continue, she expects.
And further. Experts unanimously predict that after the appearance of special labeling on dairy products with the addition of palm oil, prices for products without vegetable fats will go up. There is a high probability of a significant expansion of the range of such products.
According to Elena Tyurina, the main problem of the dairy industry remains the lack of an established mechanism for purchasing raw milk from small farms, which occupy a significant share of total production. The number of factories with raw materials at their disposal remains very small.
Will meat prices rise in Russia in the spring?
The fall of the ruble against the dollar will lead to the fact that prices for pork and beef on store shelves and markets could soon soar by 25 percent. At the same time, experts doubt this, arguing that exchange rate dynamics are in “tenth” place on the list of factors influencing the cost of meat.
The “horror story” that soon the ham of your favorite pork or beef will not be able to be bought cheaply was recently discussed by a number of media outlets, based on data from the Specialized Accounting Center for the Agro-Industrial Complex of the Ministry of Agriculture. According to a number of market experts, it is in March that consumers will fully feel the weakening of the national currency, Rossiyskaya Gazeta writes.
At the same time, experts say that there is no reason for such a serious rise in price. And they rely on data from their own market monitoring.
“We monitor enterprises in almost 40 regions. And we note that in the first half of January 2014, the negative trend in the price of pork meat continued. As a result, for example, on February 17, the average price for 1 kilogram of commercial pig carcass was 83 rubles per kilogram “In the summer of 2012, the price was 95 rubles. Where is the price increase?” asks the head of the executive committee of the National Meat Association, Sergei Yushin.
Of course, he admits, in beef sold within Russia, 35-40 percent is imported, in pork - 25-30 percent. “But exchange rate dynamics are not a determining factor in prices, since our exporters also experience currency exchange rate volatility. In Brazil, for example, the real is also weakening against the dollar, and it turns out that prices are even declining in dollar terms,” he explains.
If we talk about the recorded increase in prices for pork, which was explained by restrictions on its import from the European Union, then there is a psychological factor, explains Sergei Yushin. “At first the cost increased, but then the market and consumers saw that containers were coming from abroad, Belarus with its products was nearby, and prices went down again. Moreover, even if the price on the wholesale market goes up, it is in retail still lower than last summer,” he told the publication’s columnist.
The influence on rising prices for feed, genetic material and equipment is also doubtful, the expert is sure. “Feed is now cheaper than in 2012, you don’t buy equipment every day, the share of foreign breeding pigs in the cost is very small. 70 percent of the cost of meat is feed. More than half of feed is grain, and the grain is ours. And that’s why I think “that there are no reasons for the price increase,” emphasized Sergei Yushin.
What will still influence prices? Firstly, the dynamics of supply and demand, as well as the seasonal factor (starting Lent). And, secondly, the market itself, noticing how much the consumer is willing to pay for a certain volume of product sales. If the market sees that the consumer does not mind paying the maximum price, then it increases prices, increasing its own profitability.