Higher and higher. Why is meat becoming more expensive in the Kaliningrad region?

Chicken MEAT

Chicken meat in RUSSIA has increased in price by more than 27% since the beginning of 2023. The day before, during a meeting with members of the Cabinet of Ministers, President Vladimir Putin asked what the reasons for this rise in price were . The HEAD of state said that in such situations the government should “turn on known mechanisms” in a timely manner in order to prevent a strong rise in food prices. He suggested, if necessary, importing chicken from neighboring countries, for example from Belarus and Kazakhstan, writes RBC.

According to Kaliningradstat, in September, a kilogram of chilled broiler in the westernmost region of the country increased in price from 199 rubles in January to 216 rubles. Although in the spring prices for chicken even decreased slightly (from March to May, a kilogram of chicken cost just over 194 rubles - editor's note), but by summer they went up again. In mid-July, the Ministry of Agriculture reported: despite the increase in production in Russia, the price of chicken meat increased by 6% over the year.

Beef

Meanwhile, the price of beef in the region has long crossed the five hundred ruble mark and has become a luxury for local residents. In the last month of autumn, a kilogram cost from 522 to 665 rubles, depending on the presence of bones. Therefore, as a rule, Kaliningrad residents have learned to make do with more affordable pork, and even more often with chicken. And the rise in prices for these products has noticeably hit their wallets. Despite accelerating inflation (in September 2023 in the Kaliningrad region it reached 6.88% versus 5.7% in August), the incomes of many remained at the same level. And for a kilogram of farm pork today you need to pay 289 rubles instead of 250 rubles in January. Regional producers told RBC Kaliningrad what is happening with prices for their products today and what changes to expect next.

Pork

There is no talk of any increase in the price of pork in the region - on the contrary, prices have been falling lately. For example, last week it decreased by 25 rubles per kilogram, says Igor Kuznetsov, head of the large pork farm Baltic Meat Company-3.

“You compare three years ago and this year, and our price has not changed. With inflation roughly speaking 10% per year, our prices did not change. And now the DOLLAR has gone up, gasoline has gone up, all components of equipment are becoming more expensive. Of course, the cost began to rise and prices, some amount increased. But in fact, the season has now passed, the post-season is beginning, and last week wholesale prices began to decline.”

Reason one. Feed

Prices for chicken in Kaliningrad today are lower than in Moscow, although poultry feed in our region is significantly more expensive, notes Stefano Vlahovich, co-owner of the Food Products group of companies, in a conversation with an RBC Kaliningrad correspondent.

“Grain, corn, millet, and soybean meal are at least 30% more expensive here than in Russia. Poultry production also consumes a lot of electricity: lighting, ventilation, heating. The latter, by the way, is also 20% more expensive than in the capital. Every year our electricity tariffs skyrocket and taxes increase. Our company pays about 100 million rubles per month,” the entrepreneur announced the figures.

General DIRECTOR of Baltic Meat Company-3 Igor Kuznetsov also admits that due to logistics, local producers are forced to buy everything at exorbitant prices.

“We are tied hand and foot. Take grain for example. We buy it for about 6 rubles more than it costs in Russia. Today, feed grain in greater Russia costs 8 rubles, we are forced to buy for 12-14 rubles. Because our valiant grain union understands that even if we agree with someone from big Russia to buy grain there, we will still spend about 6 rubles per kilogram on travel. Therefore, they know that we have nowhere to go: we will come and buy. And they keep prices down, but we are forced to buy.

For example, we have now purchased more than 18 thousand tons of feed for 14.5 - 15 rubles on average including VAT, in Russia - about 8 rubles without VAT. It turns out to be 30% more expensive in the region. But now the situation is that our grain crops can be sold to Europe for 35 rubles. It’s just that today the Government’s decision is such that food supply for the domestic market comes first, and then exports and all other issues. But businessmen prioritize profit, and then think about the country. If this deterrent did not exist, and we sold grain for 35 rubles, how much would a kg of meat cost?

Exactly three times more expensive, because 80% of the price of meat comes from feed. <...> Hence the cost, and there’s no getting around it. Business,” explains Kuznetsov.

Reason two. Import components

Price changes are also affected by the exchange rates of European and American currencies. And not only because the production of meat and its processed products depends on the availability of imported components.

“Everyone is talking about import substitution. Great. Of course, we feed the chicken with domestic wheat. But if the dollar exchange rate changes, our wheat producers will be able to sell their raw materials at a higher price. Accordingly, it becomes more expensive. That's why

the fall in the ruble exchange rate leads to an increase in the price of even domestic components. We have no problems with the delivery of chickens; we raise them ourselves and try to maintain cost. But initially, all genetics are imported all over the world, except, of course, the supplier. And the initial cost is also in foreign currency. Therefore, changing the exchange rate from 57 rubles to 100 leads to a huge increase in cost,” explains Stefano Vlahovic. According to him, the cost of a kilogram of chicken meat at Baltptitseprom over the past five years, based on the amount of taxes paid, has tripled.

Igor Kuznetsov fully agrees with his colleague.

“I want to tell you that our global enterprise Commonwealth, from which we buy soybean meal, sells raw materials for the equivalent of a dollar. And we buy it for rubles, but at the exchange rate. Accordingly, if the exchange rate is lower, then we buy raw materials cheaper. The main cost is feed. The second is oil , all components, feed, etc., practically everything, except grain, is pegged to the dollar. All of our Russian manufacturers, all of them, “link” their products to the exchange rate and sell them equivalently. But we are forced to buy because we don’t have our own,” says the interlocutor.

Well-known Russian economist Natalya Zubarevich also explains the rise in chicken prices mainly by the rise in feed prices and the strengthening of the dollar.

“Firstly, there was an increase in the cost of feed. Secondly, I don’t know the state of the poultry farms, maybe there was a mass pestilence somewhere. Well, let's count the components and costs of this industry. This is not only animal feed, this is imported veterinary medicine... Has the ruble fallen? - fell. These are mostly imported additives. Well, that's all!

The fall of the ruble has not yet fully recovered, we see signs in different industries, because a lot is dependent on imports,” she explained in an interview with RBC Kaliningrad.

Reason three. Growing demand

By the way, pork processor Igor Kuznetsov has another explanation of his own for the reasons for rising prices for chicken meat - growing demand.

“Let's start with the fact that not long ago there was a strong bird flu in the region , many enterprises suffered from it. Secondly, today many chicken enterprises have agreed on supplies with Islamic states, with which we are now beginning to be friends instead of Europe.

The thrust vector has changed from Europe to the East , and there are a lot of industries in the region that trade with it. And there, basically, Islam, they don’t eat pork, they eat beef and poultry. There is demand in Russia, plus foreign demand in the East, as a result, a vacuum has been created in the market, and accordingly prices are skyrocketing,” the expert is sure.

He assumes that now that the high tourist season is over, guests are leaving, demand will begin to decrease, which means prices will go down.

“If you have 2 tons of meat, and the demand is for 4, then naturally prices will go up, this is the market. Kaliningrad is a very unique city in terms of prices, where a lot depends on tourists. [...] Today, prices in shops, cafes and restaurants in Kaliningrad are 20-30% higher than, for example, in St. Petersburg . This is how the market has developed, there are a lot of visitors in our region, there is great demand. Let me give you an example. Recently I had a birthday, I tried to book a table for 20 people in a cafe. In a less prestigious establishment, they calculated me three thousand per person without ALCOHOL, in a more prestigious one, four thousand per person. And in St. Petersburg today, on the central Vosstaniya Square, two people can have lunch for this amount. We need to treat prices accordingly, as in a tourist city,” says Igor Kuznetsov.

What next

Stefano Vlahovic does not undertake to make forecasts in the current conditions of “turbulence”, but admits that against the backdrop of rising inflation, chicken meat will become more expensive. In his opinion, within a year its value may increase by at least 15%.

Igor Kuznetsov is not so categorical about pork.

“We shouldn’t expect an increase in pork prices. For us, everything goes in waves during the season - products become more expensive, as demand decreases, prices also stagnate and decline. On average, if you look at the year, pork is at the same level, 5-6 rubles plus or minus,” sums up the head of the meat processing complex.

According to Kuznetsov, today the needs of the Kaliningrad region are more than met by three pork producers.

“Part of the meat is exported to greater Russia. Therefore, both processors and Kaliningrad residents will have heaps of pork meat. In addition, pork meat is imported into the region from greater Russia. This is a market, we EXPORT it there, they are trying to import it to us: the Miratorg company, Velikiye Luki, etc. Sometimes it turns out that it is more profitable to buy raw materials in Russia. But the ferry journey now costs us 7-8 rubles per kilogram,” the manufacturer reassured.

As RBC Kaliningrad wrote, commenting on high prices for chicken from local producers, the governor at the end of September recalled that regional authorities cannot regulate retail prices, but plan to help an enterprise that intends to start producing chicken.