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Saturday, March 24, 2018

Despite a bumper crop, food prices are only growing

A bumper crop is expected this year. The harvesting campaign is still in full swing, and at the beginning of September we have already raised 101 million tons of grain, almost

1 million tons of corn, 474,4 thousand tons of buckwheat. It would seem, all should be well fed and happy. However, most farmers are close to bankruptcy. Because of the record collection to private buyers dropped prices by 40%. As a result, farmers are unable to cover their costs of seeds, fertilizers and diesel fuel. In addition, farmers against capricious weather. So, prolonged rains primarily affected the yield and quality of potatoes. Therefore, farmers have to sell the product, that is, directly “from the field”, and storage is less. As a result, the end of the year, as experts warn, the remaining “second bread” will inevitably rise in price.

photo: Sergei Ivanov

According to operational monitoring of Rosstata, the most part of territory of Russia there are “36.4 per thousand agricultural organizations, 174.8 thousand (peasant) farms and individual entrepreneurs, 18.2 million personal subsidiary plots and other individual farms of citizens, 76.3 thousand non-profit associations of citizens. But this is only the first results of the agricultural census in 2016. Final data the Department will submit after November — when you get to the most remote and inaccessible places of our vast country.

However, Rosstat may many by this time be short.

Despite the fact that the harvest this year should be a record for post-Soviet Russia, the farmers, by contrast, go bankrupt. The fact that now dictate the price that private purchasers that use bumper crop to your advantage and bring down prices by 40%. Farmers remains nothing how to go on about them. Of course, the government buys part of the crop, reducing the market supply. So, for instance, for the agricultural company plans to buy back from the market about 2 million tons of grain. However, as farmers are complaining, this is not enough. As a result, farmers are unable to cover their expenses. “The lack of adequate measures of support to agriculture (about 25% of financial assistance in the form of subsidies and in the end not reach farmers), expensive raw materials, machinery, fuel make the labor of farmers difficult and risky,” — says “MK” Vice-Chairman of Guild of trading enterprises and services of the Moscow chamber of Commerce and industry Anna Vovk.

In addition, contributed and adverse weather conditions. For example, because of the rains primarily affected the soybeans, corn and potatoes. As a result, farmers had to hastily sell their products, thereby creating excess supply on the market. “Producers because of the lack of storage capabilities have immediately all the products thrown into the market, creating excess supply. We do not have a sufficient number of storage products. The current agricultural logistics infrastructure designed for storage of 2 million tons. The need for at least 2.5 million tons. With opportunities for long-term storage, the situation is no better. In the end, the marketability of agricultural products is at the level of 25% is a disastrously low figure,” continues Anna Vovk.

Therefore, as experts warn of the Central Bank, it is not excluded inflationary surge in the food market. In particular, potatoes. According to Rosstat, at the end of July this year, the average retail price for this product was 29,59 roubles for 1 kg. “It (the poor quality of the potatoes) will require manufacturers to sell a large part of the production “from the field” and will lead to an increase and a decrease in market prices during the period of the harvest, — says Central Bank — as a result of reduced volumes, laid on storage”. At the end of the year, the remaining products will be sold at high prices and may trigger inflation surge in the food market, noted in the regulator.

However, exactly how much will rise in price potatoes, the Central Bank did not say.


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