Grow up, piggy, big and small. What manufacturers will feed the Russians in 2021

The production of certain categories of products in RUSSIA fell by 10–20% a year. The output of others grew at the same pace. We are talking about SUGAR and sunflower oil, which have undergone targeted regulation, as well as MEAT and soft drinks. Fontanka found out how the incontinence of their release would affect prices.

Russian industrial production in October jumped by 7.1% compared to last year and by 1.8% compared to the pre-pandemic time. Rosstat recorded growth in all four sectors of the economy, however, in the manufacturing industry, the indicators are the most modest. The growth of pharmaceuticals by a third and the production of transport by 18.7% compared to last October is supplemented by a modest 6.3% of food products, although changes are more significant in certain categories of products. Thus, the production of beverages increased by 13.6%, while sugar and sunflower oil decreased by 11-17%. Fontanka figured out what this is connected with and whether prices for scarce goods will go up.

Slight changes

In January-October, the Russian food industry produced 2.1% more products than a year ago. The growth is small, but not bad for the overall figure. For certain categories of products, Rosstat also records minor changes. Thus, FLOUR was produced by 4% less (6.7 million tons at the end of October), bakery products - by 3.3% (4.3 million tons), frozen fish - by 3.1% (2.5 million tons) , butter - by 2.3% (229 thousand tons), MILK - by 0.6% more (4.6 million tons), and cheese - by 4.8% (499 thousand tons).

From vegetables, Rosstat produces potatoes, the production of which increased by 9.3% in ten months and amounted to 311 thousand tons, and, in addition to it, canned vegetables and mushrooms, which were produced by 1.2 billion conditional cans, which is 2.5% lower than last year. It would be more interesting to see data on domestic cucumbers and tomatoes, which in September-October, instead of the traditional decline, grew abnormally in price. The HEAD of the Ministry of Economic Development, Maxim Reshetnikov, told the media that the reason was the lag in harvesting and the lack of workers.

At the same time, there seemed to be no signs of trouble. According to a study by the Institute for Agricultural Market Studies (IKAR) based on the results of 2020, in recent years, the consumption of cucumbers and tomatoes by Russians has been growing, which is facilitated by a decrease in real incomes. Wholesale price indices for these vegetables reached five-year lows last year, partly due to the growth of domestic production. The Institute predicted that in 2020 the increase in the production of greenhouse vegetables in the commercial sector will be 8.9%. The market has a high share of imports, but it was expected that the share of tomato production in the total volume would reach a record 42%, or 609 thousand tons.



The production of cattle meat, pork, lamb, goat meat, horse meat and other animals remained at the level of last year. For ten months, its volumes amounted to 2.5 million tons. The production of certain categories of meat in October slightly decreased: steamed pork, cooled or chilled by 1%, chilled poultry meat - by 1.7%. At the same time, processing volumes are growing (boiled sausages were produced by 4% more, meat semi-finished products - by 4.2%), and the production of beef and veal jumped by 14% at once.

Meat is one of the most expensive products in 2021. The main reasons are the rise in the cost of feed and dietary supplements, diseases of animals and birds.

For some reason, the government decided to help reduce prices for pork and beef, which, according to the same Rosstat, have risen in price by only 16.5% and 15%, respectively, over the year. Although, for comparison, chicken meat increased in retail by 30.6% over the same period. They are also trying to regulate poultry prices, but not through duty-free imports, but through agreements to maintain stable selling prices.

As Sergei Yushin, head of the National Meat Association, explained to Fontanka, the reasons for the rise in meat prices lie in natural market processes.

“Over the past six years, food inflation has amounted to 41.3%. At the same time, meat, even taking into account a noticeable increase in prices this year, has risen in price since 2015 noticeably less. For example, consumer prices for pork, according to Rosstat, over this period have grown by 13-16%, for beef - by about 25%, poultry about the same. One of the reasons for the increase in prices for poultry meat is that they remained at the same level for the previous three years in the face of a constant increase in cost. Broiler companies didn’t have much incentive to increase production, it began to stagnate, and as soon as we faced the bird flu problem earlier this year, poultry meat production in the first quarter fell dramatically - by 6.5%, of course, there was a shortage of supply amid high demand for this affordable product,” the expert notes. According to his forecast, by the end of the year, production volumes of all types of meat should reach approximately the level of 2020. Perhaps with an insignificant plus or minus.

As for price stabilization, the head of the association admits that the governments of Russia and other countries sometimes can, and in critical situations should regulate prices in certain industries, especially where there is not enough competition, and even more so if there are monopolists, but the agricultural market for progressive development requires stable, clear and long-term rules of the game. It is impossible to constantly and unpredictably respond to any market fluctuations, otherwise the situation becomes unpredictable, and the investor does not know what to do.

“It is impossible to require poultry farmers to keep prices if at the same time the government cannot or does not want to influence the prices of amino acids, vitamins, packaging, fuel,” comments an expert on the poultry price containment agreement.

About how this method is working, industry people say this: why should a manufacturer hold back prices if they buy everything from him, and then they go to buy more from a neighbor who sells more expensive. Or an entrepreneur can cheat: make a conditional company "Horns and Hooves" and sell everything to her. She did not give the Ministry of Agriculture any word to sell cheaper. In addition, if the off-market price leads to losses, entrepreneurs will look for ways to reduce costs. First of all, the quality and safety of products may suffer. The good old pumping of carcasses with water will be used.

Another possible consequence is the bankruptcy of enterprises. Yushin calls the decision on quotas and zero customs duties on pork "absolutely untimely and ineffective in terms of stimulating and increasing production." When Russia joined the WTO, one of the last battles in the negotiations was for the domestic pork market. And then the government managed to defend the interests of the industry and the Russian economy - over the years, pork production has grown by almost 50%. The products of Russian pig farms, which can already fully supply the market, with the exception of a small share, which now falls on imports with a duty rate of 25%, will now have to compete with imports, despite the fact that the production conditions here and in Brazil are very different, the expert added .

Fall leaders

Speaking of regulated products, in January-October, Russia produced 3.5 million tons of white beet sugar. This is immediately 11.5% less than last year, which was already unsweetened.

At the end of 2020, President Vladimir Putin was surprised at the scale of inflation and instructed officials to urgently stabilize sugar prices. If you look in the forehead, the officials succeeded. Over the past year, prices have risen by only 4.5%, which is even lower than the current annual inflation. What it cost the industry, market players are still counting.

“The results of increased state regulation, which we have observed since December last year, is a very moderate increase in sugar beet acreage this year. They grew slightly, by about 8%, and not in all regions. Without regulation, they could grow more - by 10-15%, - says Evgeny Ivanov, a leading expert at the Institute for Agricultural Market Studies (IKAR). - If the state does not insist on low prices and does not regulate the sector, then in the spring of 2022 the area under beetroot will grow more, and the farms will not save on more expensive fertilizers, plant protection products, and so on. Otherwise, if the state likes to play low prices, you can see a decrease in crops and production productivity, sugar harvest per 1 hectare. It is strategically important to produce more

Nevertheless, this year production will be approximately at the level of consumption, the expert notes. In addition, within the framework of the EAEU, a decision is being prepared to introduce a quota for duty-free import of sugar in 2022. So, if suddenly there is not enough sugar by July next year, the country will be fed with imported sugar. But you shouldn’t flatter yourself, a quota of 300 thousand tons is being discussed for Russia, and sugar production in the 2021/2022 season may be about 5.5 million tons.

In December 2020, Putin was put sunflower oil in one basket with sugar. Prices for it also began to regulate in the forefront. According to the results for ten months, 1.8 million tons of refined oil were produced in the country, which is 15% less than a year ago, unrefined - 4 million tons, which is 17.9% less. Prices are also not encouraging, here, according to Rosstat, over the past year, plus 12.5%. As Mikhail Maltsev, executive DIRECTOR of the Oil and Fat Union, told journalists earlier, production traditionally decreases from April to August and grows from September. That's just Rosstat compares with the same period last year.

“Over the past season, the cost of the main types of vegetable oils produced in Russia - sunflower, rapeseed, soybean - has grown significantly on the world market. If we compare the summer months of 2020 with the summer of 2021, then it has increased by 2 times. Market regulation introduced by the authorities through price agreements, which fixed selling prices for a bottle of sunflower oil, did not allow such a jump in prices within the country. Of course, the price agreement led to losses for the industry, but thanks to the support of the Russian Ministry of Agriculture, which provided subsidies to the signatories of the agreement at the rate of 10 rubles for each liter of oil sold below the limit price, part of the losses was compensated,” Maltsev told Fontanka.

He noted that the market mechanism introduced later - a floating EXPORT duty on sunflower oil - made it possible to decouple domestic prices for oil from world prices, but in the long term the measure is not optimal. “We need to switch to targeted consumer support. It is unfair at the expense of producers to support everyone without exception, regardless of income level and opportunities. If you do not limit the income of processors, and next season try to abandon the export duty on oil, or at least reduce it to 30%, this will stimulate enterprises to increase sunflower production, invest in new projects, create jobs, and thereby contribute to the growth of household incomes ", added the expert.

Growth Leaders

Beverage production increased by 7.9% in ten months. 689 million decaliters of beer were bottled, which is 2.5% more than last year, 14.5 billion half liters of drinking water, including natural mineral water, which is 10.1% more. Especially bottling of mineral water increased in October - by 23%. By almost the same amount (+20.8%) in January-October, the bottling of juices from fruits and vegetables increased, to 1.1 billion standard cans.

“According to Global Data, at the end of 2020, the total consumption of juice products in Russia amounted to 2,280,000 liters. The data of the current year indicate that in 2021 the indicators will remain approximately at the same level, for the first half of 2021, the volume of consumption of juice products is fixed at about 1,100,000 liters. At the same time, manufacturers of both juice products and soft drinks and packaged water can increase production, waiting for the market to recover after the next wave of the pandemic, or mastering new sales and export channels,” suggested Maxim Novikov, president of the Soyuznapitki association.

As for strong ALCOHOL, Rosstat provides data from Rosalkogolregulirovanie only for October. Year on year, the production of cognac increased by 9.6% (up to 876 thousand decaliters), vodka - by 11.5% (up to 7.7 million deciliters). Only wines let us down. Their output decreased by 20.9% to 2.5 million deciliters. Vine growers complained about crop failures.

And the prices for drinks are quite stable. As follows from the data of Rosstat, domestic cognac in October rose in price by 0.2% month on month, beer of foreign brands - by 1.3%, and domestic - by 2.1%. Somewhere between them, vodka has risen in price by 2% per year. Fruit juices increased in price by 4.8%. Only grape wines with a strength of up to 14%, 20% and domestic sparkling wine are approaching the indicators of annual inflation - prices for everything have increased by about 7%. Oddly enough, mineral water rose in price most of all drinks - by 8.1%, but even this is not a crime by today's standards.