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Monday, November 20, 2017

Ration cards will support not only the poor but also the rich


The Ministry gave the details of the plans to implement targeted food aid for the poor, as is the case in many countries of the world. The program should kill two birds with one stone: to improve the diet of the poor and to help domestic producers. Mainly so prosperous the largest agro-industrial holdings.

Needy citizens will receive a special card, which will be transferred “cash equivalents” points or bonuses. They can be used to buy almost any domestic products, except for alcoholic and tobacco products and other “bad” foods like coffee, told the Ministry of industry and trade.

The Ministry has an idea to share the financial burden with business producers”

Because these products do not improve the diet, and this is the main social goal of the program. No chance to compile a list of products for programs assisted the Ministry of health. The list includes bread, flour, cereals and pasta, potatoes, vegetables and melons, fresh and dry fruits, sugar, salt, water, eggs and vegetable oil, meat, fish, milk and products made from them. In addition, included in the list of plants, seeds and forage for agricultural animals, especially for the rural population.

Cards can be used in all stores willing to work in a Central processing system, establishing a separate distribution network for this project is not required. Points will not be accumulated, within a month they will have to spend, otherwise they “burn”.

To whom and how much

Experts have long argued how much money the state can allocate for proderty and who will be able to get them. In September last year, the Ministry has estimated the need of a program of 240 billion rubles, and the number of participants in the 15-16 million people. Later, however, the Ministry presented a different evaluation: in 2017 the program will be allocated 70 billion rubles, and payments can be as high as 1.4 thousand rubles per month. This means that the allocated funds would be enough to support during the year, about 4.2 million people.

Now, however, the amount allocated by the state doubled. The food assistance program is to allocate 140 billion rubles, said the head of Ministry of industry and trade Denis Manturov. Based on the selection in the month and 1.4 thousand rubles, with this amount of funding, the program will be able to help with the purchases of about 8.3 million people.

If to allocate 140 billion rubles between 20 million people (about the number of needy it was originally), then they will receive 7 thousand rubles a year, or 583 rubles per month. The cost of the project and issuing grocery cards can eat up to 25% of the allocated budget funds, says CEO “Mani Fanny” Alexander Shustov.

Who will be eligible to receive a grocery card is unknown, the criteria will be determined later. And how much in reality will be highlighted, also not clear, as the program itself is under consideration of the government. Anna Bodrova of Alpari sure 140 billion roubles for the purchase of domestic products does not give at least because in the budget there are no available amounts to such order.

However, the Ministry has an idea to share the financial burden with business producers. The reason the producers in this. They can conditionally in half with the state to sell products at discounts for some categories of citizens, fulfilling a social function. On the other hand, manufacturers will be able to hope that the government will be less to regulate prices on a number of important social goods. And, in the end, producers will be able to increase their sales. The main thing to prove that it is really a product produced in Russia.

The effectiveness of the program

In the Ministry of industry and trade and other agencies insist that this program kills two birds with one stone. On the one hand, helps to improve the diet of needy citizens. On the other – helps domestic producers and stimulates consumer demand, and generally support the Russian economy. In particular, voiced the hope that each invested in the program, the ruble may give an additional 2 rubles to the country’s GDP. This effect is incorporated in a similar program of the United States at a discounted purchase of food. Each participant gave an average of $ 125 per month in 2014.

“Total investment in the domestic economy may be double the growth, if you count the chain receiving money from consumers to producers to suppliers of inputs and logistics, and then to trace its reverse in the form of deductions from wages and back taxes to the state budget. But again, ideally, but in practice everything will depend on the approach to implementation of the program”, – says Sergey Zvenigorodsky from UK “solid Management”.

However, social and economic effects have pitfalls. First, it indicates Bodrov, social support under this program will be condensed in duration, as food prices grow steadily and constantly. So the program continued to provide social benefits, amounts of funding will need to constantly increase. Second, not all Russians who need assistance will be able to collect the right amount of papers and references.

Some economic benefit from the program, of course, be, but get it not all market players. “Not the fact that farmers and small industries will be able to break into this direction”, – says Anna Bodrov.

And in General, experts doubt that this program will have a marked impact on GDP. Given the negative dynamics of consumption, caused by the still high inflation and lagging growth in real incomes, 140 billion roubles will not help to achieve change in the situation just because it’s a tiny amount in the scope of the market, says Alexander Shustov. For comparison: profit only one of X5 Retail Group in 2016 amounted to 1,025 trillion rubles, and in General the retail trade turnover in Russia last year amounted to 28,13 trillion rubles (down 5.2%).

Shustov believes that more effective from an economic point of view it would be to put these funds to support farmers who are actively wiping out agricultural holdings. “For 10 years, the number of farms in Russia reduced 1.6 times from 285 thousand to 174,5 by 2016 in connection with high cost loans and what to get on the shelves of retailers they simply can’t. While food production is concentrated in Russia in the hands of the 10-15 largest agricultural holdings”, – says the source.

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