Aug 29, 2021
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Offshore oligarchs inflate milk prices

The largest manufacturers of dairy products filed a complaint with the FAS Russia, demanding to deal with the retailer networks. Retail tycoons, profiting from ordinary citizens, have inflated prices due to insane markups, which sometimes reach 150 (!) Percent. Dairy producers are especially concerned that, due to unfavorable conditions on world markets, they will have to increase selling prices by an average of 7-10 percent in the fall.

The Federal Antimonopoly Service has received a complaint from the Dairy Union of Russia, which unites the main producers of dairy products in our country. Entrepreneurs complain that retailers are outright rip-off of consumers and huge markups when selling goods from the shelves. The complaint was caused by numerous appeals of ordinary citizens from all over Russia. According to dairy producers, there are no such markups in prices anywhere in the world. Retail, taking into account the specifics of dairy products, makes an unhealthy markup, which on average varies from 50 to 150 (!) Percent.

All this is happening against the background of an increase in the cost of milk. The Union notes a steady downward trend in business profitability in recent years, caused by the rise in prices for raw materials, feed for livestock, rising world prices for mineral fertilizers and diesel fuel. Only the cost of raw materials has grown by no less than 18 percent over the past 12 months. In terms of feed, the situation is even worse – a sixty percent increase over the year. Rise in processing costs – from six to eight percent. In addition, the requirements for product labeling and new environmental restrictions have placed an additional burden on dairy producers – these two factors can lead to a loss of 60 billion rubles in profit for entrepreneurs in our country.

In order to somehow maintain the profitability of production, the largest dairy enterprises in Russia are planning to raise selling prices by 7-10 percent. This will naturally reflect on the price tags in stores. However, if it were not for the insane markups of retail chains, the consumer would not have reacted so vividly to such price fluctuations, they are sure in the Milk Union.

Indeed, the situation with rising prices for milk and dairy products is absolutely unhealthy. Dairy prices rose 3.77 percent for the year, according to data from the Ministry of Economic Development released yesterday. Here it is worth considering an important fact, namely: we are talking about a socially significant product.

So what?

Retailer networks did not hear the warning from Prime Minister Mikhail Mishustin. In May this year, the Prime Minister dwelled on the problem of price increases and blamed “greedy suppliers and retailers” for it. Mishustin’s remark is completely correct. Retail plays the role of a common intermediary between the producer and the consumer. Therefore, its markup should be minimal. The First Russian TV Channel Tsargrad reported about it here.

But the domestic business, unfortunately, is accustomed to avarice and does not hesitate to double the price or even triple the price.

In addition, retail tycoons prefer to transfer their profits to foreign offshores, and contribute to the outflow of capital from our country. The prime minister threatened retail a few months ago with all available tools to “curb appetites.” It is quite obvious that you cannot take a company by intimidating X5 Retail Group. Extremely harsh measures are required. Ideally, the nationalization of large networks, however, everyone understands perfectly well that such a measure is hardly feasible in the current conditions (there is no political will). However, the state can set fixed prices for socially important goods. Or, at least, legally limit the margin to a minimum.

Konstantin Dvinsky

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