Feb 16, 2021
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Putin “slipped” on vegetable oil

Putin "slipped" on vegetable oil

Photo: Kirill Kukhmar / TASS

The Ministry of Economic Development sees no need to extend the agreements to stabilize prices for sunflower oil and sugar, but the final decision will be made in March. This was announced by the head of the department Maxim Reshetnikov

“We are monitoring the situation very closely and we will make the final decision in March. But so far we do not see such a need. Both networks and manufacturers understand everything, “the minister said in the program” Characters from Naila Asker-zade “on the Russia 1 TV channel.

Also, the head of the Ministry of Economy said that the successes of the agro-industrial complex were one of the reasons for the rise in food prices. According to him, in recent years Russia has indeed become the largest exporter of foodstuffs, especially wheat. “Producers, when the price rises, they naturally sell to where it is higher, it is higher for export,” the minister explained.

Let us remind you that earlier the Ministry of Agriculture, the Ministry of Industry and Trade and a number of manufacturers and chains had previously signed an agreement defining the maximum selling price for sugar and sunflower oil. The maximum selling price of oil was 95 rubles. per 1 liter, retail – 110 rubles. for 1 liter. The maximum cost for sugar is 36 rubles. and 46 rubles. for 1 kg, respectively. The agreements must be valid until the end of the first quarter of 2021.

In early February, Reshetnikov admitted that these measures did not work. He proposed introducing from April 1 a damper mechanism similar to the gasoline market, which will prevent the transfer of fluctuations in world prices to the domestic market. At high prices, the export duty will automatically increase, and at low prices, agricultural producers will be compensated for the losses.

– An idea with an attempt to “stabilize” prices for sunflower oil and sugar through the implementation of some administrative measures was initially doomed to failure, – I am sure Director of the EAEU Institute Vladimir Lepekhin… – It is impossible to regulate prices administratively in a country where the real power is not politicians, but traders. I do not know who convinced the president and for what purpose Putin to get into this business, but it is clear that it is not for a good purpose. If the goal was banal PR, then the president’s instructions to the Ministry of Economic Development officials to take measures towards freezing prices for these two rather important food products were stupid, but I admit that this was another setup by the head of state.

The President was once again convinced that he is not the boss in the country, and his orders are not executable. And why – he must guess for himself.

“SP”: – Why have prices increased at all?

– The main reasons for the rise in prices for something in the Russian Federation are two factors. The relative rise in prices is determined by the depreciation of the ruble against the dollar, and in this sense, for example, the price of imported sunflower oil and more than 70% of food products cannot but rise following the depreciation of the ruble. The second factor that dictates an absolute rise in prices is the excessive monopolization of both the trade and food production sectors. Russian retail chains, which are virtually a single transnational cartel, have no difficulty in agreeing on a price for any product they sell. Well, the Federal Agency for Monopoly Policy today is so mediocre and corrupt that it is absolutely incapable of controlling foreign monopolies operating on the Russian market.

By the way, I do not exclude that it was the merchants who dragged Putin into a scam trying to keep the prices of sugar and butter and showed him in the end that they could bring down the Russian market at any moment (for example, organize a shortage of food products in the country) if the head states will pursue policies different from the interests of global trade networks.

Why butter and sugar? Precisely because these two products occupy a special place in the Russian food basket. And if today the traders showed the president that he is not able to guarantee the citizens of the country access to these two products, then tomorrow, for example, bread, salt, milk and baby food may become scarce.

“SP”: – What should be expected in the foreseeable future? Will they solve the problem?

– On the one hand, the situation with the failure of regulation of prices for butter and sugar is pushing the head of state to take a number of measures in the country aimed at at least demonopolizing the food market, and at the most – at drastically limiting the influence of Western companies in the country, curtailing the offshore economy and real import substitution. On the other hand, the situation may become the threshold of a large-scale destabilization of the Russian market as an instrument for ensuring the transit of power in the interests of TNCs.

There will be no final solution to this problem. Representatives of the Ministry of Economic Development today simply have nothing to say. In the government and the president’s entourage, the struggle is growing between representatives of globalists and supporters of the sovereignization of the Russian economy. Naturally, no MED does not guarantee its outcome in favor of one of the parties. But the officials of this department, no doubt, on their skins probably felt the power of the IMF lobbyists and trade syndicates, dictating decisions and actions aimed at them in opposition to presidential decrees on the need to contain prices.

– The government decided to show that it is fighting price increases without thinking about the real significance of its actions, – believes Dmitry Galkin, political columnist for the 2000 newspaper… – Obviously, the price of vegetable oil and sugar is not important for the vast majority of consumers. Representatives of wealthy social groups do not pay attention to these products at all. And the majority of Russian citizens suffer much more from the rise in prices for meat and dairy products. It was easiest to fix prices for vegetable oil and sugar, since these goods are produced mainly from Russian raw materials.

Therefore, the government decided that it would be easier to get sugar and butter producers to agree to its demands.

“SP”: – That is, it was a PR action?

– The introduction of firm prices for butter and sugar was indeed an action designed to improve the attitude of the poorest segment of society towards the government. We do not have data to judge whether the event achieved its goal. The government most likely has such data. Judging by the fact that they decided to abandon the firm prices for sugar and butter, this action did not help improve the image of the government in the mass consciousness.

“SP”: – How painful is it for manufacturers? Whose interests are more important to the government: producers or consumers?

– I think that spending on sugar and vegetable oil is not significant even for the poorest categories of citizens. As for the Russian producers of vegetable oil, they are increasingly focusing on foreign markets, and therefore are unlikely to be seriously affected by the introduction of fixed prices.

Sugar producers are another matter. The acreage of sugar beet has been severely reduced as its production becomes less and less profitable. In such conditions, maintaining stable sugar prices for a long time could seriously damage the industry.

“SP”: – Why was it decided not to renew the agreement? Earlier, Nabiullina said that this was not necessary. In addition, she believes that there is no reason to extend them to other products either. Why?

– It is simply impossible to extend this agreement to other groups of goods of comparable or greater importance from a social point of view. Therefore, the government is not going to do this. As for the introduction of fixed prices for sugar and butter, it seems to me that they decided to abolish it not at all because of concern for producers (otherwise it would simply not have been introduced), but because it did not help improve the attitude of society towards the government.

SP: – Reshetnikov proposes to introduce from April 1 a damper mechanism, similar to the gasoline market, which will prevent the transfer of fluctuations in world prices to the domestic market. Will this work?

– Most likely, it can work. But only with those goods that, like gasoline, are supplied not only to the domestic market, but also for export. But such food products are relatively few. In particular, this measure is likely to have no impact on the prices of sea fish, fruits and beef, which are becoming virtually unaffordable for the poorest groups of the population.

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