Producers of sausages and frankfurters began to contact retailers with requests to increase wholesale prices for their products within 10-15%. As clarified, for example, the trading network “Lenta”, which received such an appeal, manufacturers justify their request by the increase in the cost of raw materials.
So, according to one of the large meat processors, if in February last year the cost of a broiler carcass of category I fluctuated between 87-92 rubles per kilogram, then by now this figure reaches 134-138 rubles. There is a similar story with pork on the bone – in February 2020 it cost about 119 rubles per kilogram, but now it is still the same 134-138 rubles. Also, the head of the National Meat Association notes Sergey Yushin, prices for spices, which are pegged to the currency, as well as shell and packaging, transport and electricity, are also increasing in the cost structure of processors.
As the president of Agrifood Strategies explained to the media Albert Davleev, an increase in the cost of poultry meat is inevitable and is explained by a number of factors. First, the prices for compound feed increased on average to 18 thousand rubles per ton. Secondly, in almost all of Eurasia, the livestock (and, accordingly, production) is decreasing due to the spread of bird flu. Thirdly, many companies are experiencing problems with a lack of working capital.
On the wholesale pork market, according to the general director of the National Union of Pig Breeders Yuri Kovalev, the imbalance arose in connection with the December outbreak of African swine fever, due to which the industry had to destroy about 500 thousand animals.
“The only way for producers to maintain margins is to broadcast the price increase for retail,” stated the commercial director of the APF “Nasha Zhitnitsa” Artem Kudimov, adding that in 2021 prices for beef may also rise.
Without raising prices, the deputy general director of the Prodo group agrees Henrikh Arutyunov, meat processors are unlikely to be able to “take the blow for a long time,” but due to social factors and government control over pricing, it is hardly possible to raise the cost of processed meat products.
In addition, Sergey Yushin admits, there are more than 1,000 meat processors in Russia now, so in a highly competitive environment retailers themselves may not agree to price increases. In his opinion, most manufacturers in the segment of cheap products can be painlessly replaced, and the mass consumer will not notice the disappearance of expensive products from the shelves.
Against this background, the Ministry of Agriculture reported that they had not received any requests from meat processors to increase the cost of their products. And, in fact, there are no reasons for this – at the beginning of the year, due to the oversaturation of the market, prices for pork fell, and a similar situation is developing with poultry meat. According to the ministry, now prices for the same slaughter of chicken are even lower than they were two years ago.
However, our ministries, which in one way or another control the food market, are not new to making a good face with a bad game, and the recent story with the prices of sugar with sunflower oil is a vivid confirmation of this. Does this mean that very soon the prices for sausage and sausages will skyrocket, and the government will again have to use “non-market mechanisms”?
– The Ministry of Agriculture is right only in one thing – that now, figuratively speaking, we have not a nuclear war, not a famine or a natural disaster, – he shared his vision of the situation with SP ex-Deputy Minister of Agriculture and Food of the Russian Federation, Professor, Doctor of Economics Leonid Kholod… – This is a common struggle between supply and demand. The only difference is that it is taking place against the backdrop of inflation, which in the food sector, by the way, is slightly higher than the general one in the country, and the continuing decline in household income.
Now the real effective demand of the population is such that retail chains are now just balancing on the edge. And, unlike cereals or bread, sausages and sausages are a more valuable category of goods, the demand for which is not elastic. And if the prices for them are raised, then the stores will simply be left without revenue. Therefore, stores, sitting, as they say, on their nerves, constantly resort to stimulating demand through constant promotions for certain products of meat and dairy processing.
As for the producers themselves, they face problems from the suppliers, since no one canceled the rise in prices due to inflation, so their intentions are quite understandable.
“SP”: – What can be the final result of the development of events? Will sausage with sausages become as rare guests on the tables of Russians as red and black caviar?
– Obviously, some agreements will still be reached, although, I think, there will be no sharp rise in value. Because, I repeat, there is a limitation in the effective demand of the population, especially in inelastic segments of trade. Sharply, by 10-15%, no one will raise the price, because then there will be a sharp drop in demand, but a slow increase in the cost of sausages is already underway, and we can see this perfectly well from the price tags on the shelves.
“SP”: – But if retailers do not satisfy the request of meat processors, it is logical to assume that the market of manufacturers, and, accordingly, the range of products will inevitably collapse?
– Here we get a very interesting “rocker”. At one end of it is the understanding of processors that in order to maintain the profitability of production, they need to increase the purchase price of their products by 10-15%. But at the other end – if they get it from retail, there will be a drop in demand for products. And here you will have to think banally that in the end it is more profitable – a shortfall in profit due to non-increase in prices, or a shortfall in profit due to a decrease in sales volumes. In the latter case, by the way, the consequences can be more serious than in the first one, because if the profitability of large meat processing plants balances on the lower edge of profitability, this is still half the trouble, and medium or small meat processing plants run the risk of going bankrupt with all the ensuing consequences.
“SP”: – Straight stalemate situation. As one movie hero of the famous Soviet comedy said, “I am tormented by vague doubts” – will this situation force meat processors to simply reduce the quality of their products so as not to go broke?
– Of course, the recipe and production technology will obviously have to be revised. But here you need to understand that chain stores like Pyaterochka or Magnit already present a range of meat products, which are clearly cheaper than others due to changes in technical conditions. I admit that meat of lower categories can be used more actively, but it is unlikely that the quality will be lowered to completely inedible, it will come out more expensive, who will buy sausage, say, using some tenth category of meat. So, I repeat, games with recipes are possible, but up to a certain limit.
– A decrease in the quality of products is inevitable, and it will go first of all for semi-finished meat products like sausages or dumplings, – expresses an alternative point of view Pavel Shapkin, chairman of the National Union for the Protection of Consumer Rights… – Cheaper ingredients and ingredients will be used. Moreover, the use of soy protein from the point of view of reducing the final cost of products is a very controversial issue, since its purchase price is quite high, so what and what will be replaced in the end is an open question. But the fact that this will definitely not benefit the consumer is already well understood.
“SP”: – How will our government respond to the situation? Will repeat recipes from stories with gasoline, sugar and sunflower oil?
– I admit that the Russian government will once again arrange a “brainstorm” and make a decision from the category “do not raise anything else, leave everything as it is.” Also, everyone will once again be promised some kind of subsidies, which can only be obtained if all imaginable taxes are paid in full, a whole heap of various certificates and documents is collected, as well as promises not to fire anyone. That is, there will be something purely symbolic and impracticable. And the problem will remain so, because manufacturers still do not have alternative sales channels for products, and large retail chains will continue to bend their line of not increasing purchase prices.
We, of course, now have a government decree on the development of non-chain retail, but it is still purely declarative, because until it comes to practice, it will take a lot of time, because it is one thing to issue a decree, and quite another to develop a clear working order for these good wishes. regulatory framework.