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Thursday, October 27, 2016

The lifting of the embargo on baby food, inflated prices

The agriculture Ministry proposes to relax an embargo on the import of foreign products necessary for the production of baby food. Agricultural Department has estimated how much meat and vegetables need to be imported in the country, so that our children grow strong and healthy. With questions, to the extent justified, especially in high season when the market is filled with domestic products, “MK” addressed to the Deputy Director of analytical Department of company “Alpari” Natalia Milchakova.

photo: Gennady Cherkasov

“MK”: the Ministry of agriculture insists on the withdrawal in August of sanctions on certain types of agricultural products to Western European manufacturers. Why do we need to do in the midst of harvest and on the background of growth of the Russian agricultural sector? Correctly or not supplied by the government?

N. M.: As far as I know, the Ministry of agriculture’m not talking about lifting sanctions, and the imposition of quotas on imports of certain agricultural products from the sanctions to countries for the production of baby food. While this is only the draft, but if the government will adopt such proposals, it will be absolutely a wrong step.

For example, the quota products among these appears the potatoes. Traditionally in the markets and in stores in the fall there was a surplus of potatoes, which leads to lower prices, and then also add an import feature that will bring down prices for the products of domestic producers. Imported potatoes can cost even in the period of excess supply of potatoes at least 50-70% more expensive. Why are domestic producers of baby food to buy expensive imported potatoes when you can buy domestic raw materials more cheaply?

In addition, after the introduction of predamage at the leading Russian manufacturers of children’s food has its own raw materials, some of them increase the purchase of Russian farmers. Other vegetables, except potatoes, we can say that of bradenburg gave a powerful impetus to the development of its own greenhouses and 1-2 years in Russia seasonal increase in vegetable prices will be smoothed, as domestic fresh vegetables will be available in stores all year round. Why did his hands kill the goose that. lays the Golden eggs, and will carry even more? It is unclear who wants to support the Ministry of agriculture, although by definition, he is obliged to support domestic producers. But, in my opinion, the government refuses such proposals, especially now on the eve of elections to the state Duma, or in the regions, especially agricultural such a step will not understand.

MK: What products are we missing as producers (vegetables, fruits)?

N. M.: According to the marketing agencies, Russia in the first half of 2016, nearly 95% of available vegetables of own production, but in the period from March to may, fresh vegetables were still in relative short supply, which is replenished by imports. Market fresh fruit a more complex situation: in six months on the market seasonal fruit (summer and autumn) is dominated by domestic manufacturers, and winter and spring fruits such almost completely replaced by imported products. As for tropical fruits, they are almost completely imported. If introduced quotas on import of some kinds of tropical fruits from Europe, it would be more logical, as at least a little possible to reduce the price, and especially such a step would be useful in winter.

However, in my opinion, it would be better not to give the countries that have imposed economic sanctions against us, until they have their sanctions will not be canceled. If you cancel own sanctions against the Turkish fruit, it would help to partly solve the problem of falling prices. By the way, the vegetable market, if we are so eager to provide the Russian producers of imported raw materials, why not bet on Turkish vegetables? Turkey will receive more economic benefits.

A ban on GMO-components is intended to guard the health of the population. Requirements for Russian producers, too, must be strict and then market participants will begin to look for a replacement artificial components. Let me remind you that in the period of retaliatory sanctions, Russian agriculture shows an annual growth rate of 4%. And this is not the limit. Russia ranks first in the world reserves of fertile land. More than 15% of the world’s black soils are found in us. Clean, healthy soil and culture they are growing the competitive advantage of Russia on the world agricultural market.

MK: What is the situation on the Russian market of baby food, do we need imports?

N. M.: On the baby food market situation is relatively good growth in 2015 in this segment amounted to 3%, which is not bad in an economic downturn in Russia in General. But the problem with this market is the increase in prices which exceeds the rate of growth of prices of food in the whole country. For example, the prices of fruit and vegetable purees for last year increased by 20-25%. Perhaps the Ministry of agriculture by admission of imported vegetables to the Russian market tries to reduce prices on finished products, but, in my opinion, this is unlikely to affect the decline in prices, as the share of imported raw materials for this segment of the market will still be small.

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