Why is food inflation higher in Russia than in most countries of the world?

One of the reasons is that domestic food prices in RUSSIA are already higher for many items than in developed countries. And it arises because of the monopoly of agricultural holdings. This is shown by the work of economists Semin, Tretyakov, Trub and Danilova from the Ural State University of Economics and the International Academy of Agrarian Education (“Issues of Fisheries”, No. 3, 2021). Some excerpts from their research.

“The prices on the Russian market for goods that we EXPORT or import for such items as poultry MEAT, SUGAR, tea are significantly higher than world prices, for example, for poultry meat by 2 times, for sugar by 1.6 times. For pork, fish, MILK, wheat, prices on the Russian (external) market practically correspond to prices on world markets, only slightly inferior to them.

If we proceed from the purchasing power parity (PPP) of the currencies of Russia, Germany and CHINA against the US DOLLAR , then Russian consumer food prices are much higher.

Thus, in the US, consumer prices are significantly lower than in Russia, for example, for milk, almost 3 times, beef and eggs 1.8 times, chicken fillet by 1/3, and only potatoes and apples in the US are higher than Russian prices.

In Germany, all food prices are much lower than in Russia.

The picture is similar for food prices in China, except for the price of milk .

Therefore, the current increase in retail prices in Russia is more sensitive to domestic consumers, and to a greater extent affects the level of well-being of Russians, in comparison with other countries. Any Russian producer of agricultural products (farmer, agricultural holding) is naturally aware of what is happening on the world food market and is closely watching the rapid rise in food prices, and also seeks to raise their prices, regardless of who the buyer is: an exporter or a domestic commodity producer in the future. industrial processing of agricultural products, or a wholesale buyer for further resale in retail.

Naturally, the question arises: why in Europe there is practically no increase in consumer prices, and in Russia, despite the measures actively taken by the government, there is a significant increase in retail food prices.

The most significant of the factors influencing the growth of consumer prices for food is the monopolization of the agricultural and food market in Russia by agricultural holdings and the largest retail chains.

Agricultural holdings account for more than 50% of the total revenue of all agricultural organizations. The share of agricultural holdings is dominant in the production of poultry meat - 61.5%, pork - 59.3%, sugar beet - 59.4%. The existing monopoly leads to a significant increase in consumer prices. At the same time, over the past 10 years, the share of agricultural holdings in the total revenue of agricultural producers has increased by 2 times, in profit - by 3 times.

In the EU countries, the growth rate of consumer prices is minimal, despite the rapid growth in world prices, because. strict antitrust laws apply. And monopoly players operate freely on the Russian food market, which inevitably leads to a cartel agreement between them to increase prices.

Another major factor in the growth of consumer prices for food products on the Russian market is the introduction in 2014 of a food embargo on the import of certain types of agricultural products, raw materials and foodstuffs into Russia. The embargo leads to the fact that the domestic commodity producer - the monopolist does not seek to increase production efficiency, improve product quality and reduce costs, but raises prices for marketable products in order to obtain high profits.

Analysts from the largest banks predict that prices in Russia will grow by 5% in 2022 

Carrying out a real antimonopoly policy in the agricultural sector and trade, creating a competitive environment in the Russian food market is the only effective tool for stabilizing consumer prices.”