Last year food inflation in Russia exceeded 20%. However, experts believe that in 2016 the growth of food prices will slow down to 10% because in the context of low demand, producers and retailers will try to keep prices low to attract consumers. According to the director for development of the Association of Manufacturers and Suppliers of Food Products 'Rusprodsoyuz', Dmitry Vostrikov, one of the main reasons for the increase in food prices is the lack of competition.
“If we analyze all the supply channels from field to shelves, then one of the growing monopolists are retail chains. Their control over the market allows them to receive higher marginal profitability, to work on the negative circulating capital, which basically no one in the food industry or in the agricultural sector can afford,” the expert stated.
He also paid attention to the problem of the huge number of loans to our farmers: “They need to give one harvest to banks just "to break even". There is no place for extended reproduction here… Where is the cheap "long" money? There is virtually none. Considering the debts of farmers and the debt load, there is simply nothing to mortgage to get some credit in the bank. After the change of the dollar exchange rate, food enterprises have landed in the same situation.”
The expert is angered when the media say that there is a 1000% difference between the selling price of producers and the prices on the counter: “There is no such price! Well, double – yes. But those are perishable goods, and there are a very large percentage of write-offs.”
Less competition and more monopolization lead to difficulties. Vostrikov suggests following the path of competition: “If we talk about distribution channels, in Moscow they "mowed down" all the stalls: they have removed 35,000 retail facilities, almost all agricultural markets. We ourselves are practically building up this monopoly here. It is clear that the Industry and Trade Ministry has initiatives, mobile commerce, alternative retail outlets, as my acquaintances say, only small facilities near the house, markets and so on can compete with retail chains. It's just like guerrilla units being effective in fighting large armies. Such guerrilla units in the form of private traders, they really can create some competition.”
