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Friday, March 16, 2018

The principle of “the third wheel” will give money to Russian farmers

Billions of dollars expect to earn domestic farmers as a result of new rules imposed by the government. In the coming days will come into force a ban on state purchases of imported food, including for schools, kindergartens, police, army and prisons. However, some loopholes for the foreign products still remains.

As of September 3, earn restrictions on the purchase of imported food by the government. Now public procurement of products will be held on the principle of “the third wheel”: if in the course of purchase have been filed at least two applications for the supply of products, the country of origin is Russia or the Eurasian economic Union (EurAsEC), the application with the imported products rejected.

“In terms of the sufficiency of products prohibited for procurement, there are problems with the production of quality red fish and shellfish”

The list includes food products of the 23 items. It includes the production of fish, meat (beef, pork, poultry, veal, offal), dairy (milk, butter, cheese), rice, salt and sugar.

We are talking about public procurement of products necessary to provide power to schools, hospitals, kindergartens and other state institutions. The main volume of such purchases makes the reserve, which buys the products, including the army.

“The restriction does not apply to commercial purchases, for example in online stores, the wholesale-retail segment of the food trade” – an important clarification by the Minister of agriculture Alexander Tkachev. Thus, no restriction of competition in the market of the question, but the government now has the right not to Finance the import of agricultural producers – the money should go to support their own.

The deficit on the domestic market can be expected, assured the Minister of agriculture. First, many included in the list of foods Russia almost itself provides. So, Russia at 93-100% self-sufficient in sugar, pork and poultry meat, 82% of milk, 75% beef. A big bonus also receive the Belarusian enterprises, which in the framework of the EEC do not apply to imported. Belarusians, for example, will be happy to take part in government purchases of dairy products, where Russia, though increasing, but not yet reached full self-sufficiency. Problems may arise with beef. However, the deficit and should not be here, because if the Russian manufacturers will not be able to offer beef, the government customer can purchase branded.

“The share of imports in the domestic market of fish and seafood is slightly more than 13.5 percent, the share of imported milk and dairy products in Russia is quite high, but over 90% of imports provides Belarus, and her restrictions do not apply. Meat problems should not arise”, – confirms Dmitry Lukashov from IFC Markets.

According to Tkachev, Russia decided not to impose restrictions in public procurement for fruit and greenhouse vegetables, as Russia provides itself with them only a third, and everything else is imported.

The volume of procurement of food tens of billions of dollars a year. According to the agriculture Ministry, the volume of procurement for certain food products for the social sector constitutes 4-13% of the total volume of their production in Russia. New restrictions to minimize risks of corruption and choose to import to the detriment of domestic products. However, in recent years the share of imports in public procurement and no such restrictions have steadily decreased. So, it is estimated based on data from the Federal customs service, the volume of food imports for two years has decreased almost twice – from $ 41.9 billion in 2013 to approximately $ 25 billion in 2015, reports RIA “Novosti”. Especially this reduction affected products from countries of the so-called far abroad.

“As a result of devaluation the cost of imports in individual product categories increased by 40-60%, so the import is already difficult to get into the structure of procurement for the needs of government agencies, law enforcement agencies, state corporations,” – said Dmitry Lukashov.

It turns out that due to the restrictions of domestic manufacturers are able to get additional access, if not to all 25 billion dollars, most of this amount. Tkachev has previously said that the share of domestic food products in public institutions is about 60% (including fruits, where the share of imports – as much as 20%).

It is clear that Russian manufacturers gladly accepted appeared in the spring, the idea of limiting imports in public procurement. Although a embargo for supplies to Russia from Europe, from Ukraine and from other countries of products, and this, of course, a major incentive for domestic companies not to be afraid to invest. But the embargo can not be forever. “Everyone is worried what will happen to the food industry after the lifting of the counter. Restrictions of imports in public procurement will help Russian, Belorussian and Kazakh food industry to cope with the negative consequences of a possible future lifting of the counter-sanctions”, – said Mikhail Krylov from “Golden Hills – Kapital AM”.

However, besides the positive aspects this measure may lead to higher prices and deterioration in the quality products under the state order. The lack of competition with import creates the preconditions of overpricing domestic companies. And, of course, in the pursuit of volume production often reduces the quality level. It is enough to remember history with a record increase in imports of cheaper palm oil for use in the food industry or being in the milk, which should not be there.

However, experts do not exclude that the structure of public procurement will not change drastically, therefore the quality will remain the same. According to statistics, the procurement of products made to supply the 25 million Russians. This includes catering in schools, kindergartens, universities, municipal and budgetary institutions, as well as in government and the rule of law, orphanages, prisons and other organizations.

“The share of imports of food, trapped in a restrictive list, public procurement accounted for only 20% of the total. This is mainly imported meat and fish products, caviar and fish specialties, which likely accounted for the needs of municipal institutions and authorities”, – said Kirill Yakovenko from “ALOR Broker”. In other words, now the authorities will find it difficult to order imported caviar or meat for their banquets, and formal events. As for kindergartens, schools or prisons before hardly bought imported products, such as caviar or Kobe beef. Therefore, the government demand to domestic products is unlikely to greatly increase, believes Yakovenko.

On the other hand, the new restrictions may help to ensure that Russian officials will start looking for local delicacies, not to strike in a dirt the person, for example, when it is necessary to feed the foreign delegation. “In terms of the sufficiency of products prohibited for procurement, there are problems with the production of quality red fish and shellfish. Other products, given the supply from the Union, to provide for themselves is quite real. Shellfish and fish, however, is also available, but they are more expensive than from the EU,” says the source.

However, Yakovenko easily found a loophole to bypass officials to ban government purchases of imported food products, given that the prohibition does not apply to commercial purchases and wholesale-retail trade. “Can be created by the contractor, which will buy a cheaper product at retail and sell it under the guise of perevalovskogo already on the territory of Belarus or the Russian Federation of the goods. Such a maneuver suitable for the purchase of delicacies for the state authorities, which are renowned for its love of oysters and black caviar,” says Yakovenko. “But this is only in theory. Given the strict measures of the state sanctional last year, fans of extreme savings might change your mind to use the loopholes,” he adds.


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