The agreements on the stabilization of sugar prices have been extended until June 1, 2021, and for sunflower oil – until October 1, 2021. The corresponding decree was approved by the Prime Minister Mikhail Mishustin… We are talking about agreements that the Ministry of Agriculture and the Ministry of Industry and Trade conclude with industry associations, as well as with manufacturers of goods, suppliers and retail chains. They stipulate that a liter of sunflower oil in the wholesale should cost no more than 95 rubles. and no more than 110 rubles. in retail, and a kilogram of sugar – no more than 36 rubles. wholesale and 46 rubles. in retail.
Recall that for the first time the prices for sunflower oil and sugar, the state, together with business, decided to fix in December last year, after the president Vladimir Putin drew attention to the sharp rise in the price of some products. Prices for both were frozen for three months – the agreements expired on April 1, 2021.
Many media outlets wrote last week that the authorities were preparing to extend agreements to contain prices for these products. In addition, the Ministry of Economic Development and Trade announced that from September 1, it is planned to introduce export duties on sunflower oil, and the duty on sunflower from July 1 will become prohibitive.
How much will this help? And most importantly, how long will it work? Indeed, in market conditions, prices cannot be contained for a long time. And in general it looks like a fight with the effect, not the cause …
– A significant part of sunflower oil and sugar are produced in Russia from local raw materials, – reminds Dmitry Galkin, political columnist for the 2000 newspaper… “Therefore, it seems that the prices of these products are quite easy to control. It is necessary to restrict their exports or introduce high export duties, and then producers will be forced to increase supply in the domestic market, despite the introduction of price caps in wholesale and retail trade. In the short term, this scheme may actually work, but then manufacturers will simply cut back on the output of products for which a ceiling price is set. But as we can see, the government is going to keep the prices of butter and sugar down for only a few months. For many manufacturers, this may be a strong blow, but it seems to me that the respective industries, in spite of gloomy forecasts, will not have time to suffer much. In general, the rise in prices for food products in the current situation seems inevitable. And to introduce, at least temporarily, marginal prices, without creating a threat of a deficit, it is realistic only for those goods, the supply of which on the domestic market can be temporarily increased by limiting exports.
“SP”: – Why are prices frozen for these periods? What will change?
– In the summer, the demand for sugar rises sharply as citizens begin to process fruits and berries. It is clear that it is simply impossible to keep the marginal prices for sugar during this period. Therefore, the government is not going to do this. As for the maximum price for oil, it is going to be canceled soon after the elections to the State Duma. This is quite logical. Since the decision to keep prices down was motivated by the desire to increase the popularity of the authorities, then after the end of the elections there is a reason to reconsider it.
“SP”: – Can they also be extended? For a long time?
– It depends on how much the head of state believes that such actions help to curb the growth of protest moods. If the president is convinced that by such means it is possible to demonstrate to the citizens that the authorities care for their welfare, then they will try to restrain prices further – despite the protests of producers. But most likely, the ineffectiveness of such measures will be so obvious that the introduction of price caps will be abandoned this fall.
“SP”: – What is the point for sellers to sell goods with frozen prices if suppliers have higher prices? After the first freeze, a shortage of sugar and sunflower oil arose in many chains …
– It’s hard for me to say how things are in the country as a whole. But, it is clear that in Moscow and the Moscow region – the richest regions of the country (with the exception of the oil-producing autonomous districts of the Tyumen region), many retail chains simply do not consider it necessary to purchase goods of a low price segment.
“SP”: – What if prices are released? Will they take off and the people revolt? Does the government need all this freeze in general only for momentary PR?
– Prices will inevitably rise even if the marginal price is maintained. Producers will simply switch to more expensive types of products (as was the case, by the way, in the early 1980s), and as a result, those types of goods for which prices are tightly regulated will be in short supply. In the conditions of a capitalist economy, attempts to contain prices for certain types of goods are conditioned by considerations related to public relations. The emergence of a shortage of such goods from the point of view of PR will be a complete failure. Therefore, the government will try to prevent such a situation from occurring.
– Not a single state in the world that declares its adherence to the market model of the economy is trying to solve it by the methods the Russian government is trying to solve the problem of rising food prices, – I am sure Director of the EAEU Institute Vladimir Lepekhin… – The federal government seems to have decided to shame Egor Gaidar with its release of prices in 1992 and after 30 years of wandering in the increasingly “market” economy, it set out to shove toothpaste back into the tube. But this is unreal. Either you return to the country the administrative economy with total state control over prices, or do not deceive yourself or the consumer with measures to “curb” the rise in prices for some individual foodstuffs.
Personally, I have no doubt that the policy of containing the rise in prices for butter and sugar by prescribing to put up appropriate price tags on store shelves is from the evil one. And who wants to cheat whom – I already told Free Press a couple of months ago.
“SP”: – Why did the prices go up at all? Can they go down on their own?
– In Russia, prices are rising for two main reasons. The objective reason is the depreciation of the ruble, which automatically leads to an increase in the cost of imported goods. The subjective reason is the total greed and stupidity of the Russian bourgeoisie: in a situation where demand is falling (due to a drop in the purchasing power of the population), sellers do not lower prices for goods in order to attract a buyer, but, on the contrary, increase them in order to shift their costs to the buyer, in in reality, further reducing demand and driving price increases.
“SP”: – Why only butter and sugar? Are prices not increasing for other products?
– Butter and sugar, on the one hand, are consumer goods. On the other hand, they do not belong to perishable goods, and therefore can wait for their buyer for months. So the fact that the price does not rise at all for milk or meat only confirms my assumptions about a cartel conspiracy of traders who raise prices in response to tax collectors in the government, who fight off business by three skins.
“SP”: – But it will not be profitable for sellers to sell at frozen prices if prices from suppliers do not change?
– If retail chains do not take oil from suppliers, the latter will suffer even more than the chains. And in general: in Russia, where everything is extremely monopolized, the price of a product is dictated not by the supplier, but by the seller who wanted the product – took it, did not want it – did not take it. The problem is different – that no one will ever trade at a loss. The Russian official does not understand this simple truth, and therefore again plunged into a dangerous game for himself.
“SP”: – How many more will they renew? Year? Two? Then what?
– I will repeat once again: “the fight against price freezing” is a mutual game between the blind and the deaf, in which traders pursue their goal, and officials, being unable to understand the true reasons for the rise in prices, and also not being motivated to actually solve the problem, simply deceive population, imitating this struggle.
And this game will continue, I believe, until the end of the transit of presidential power.