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Larisa Erina supports the idea of limiting food product markups

The Kommersant newspaper published an article on relations between domestic food producers and retail chains. Against the background of the pandemic and the weakening of the ruble, these relations have undergone significant changes. The Association “Greenhouses of Russia”, comprising the largest Russian producers of greenhouse vegetables, offered the leading retailers to limit the markup on food products and sign long-term supply agreements (up to one year). The bakeries who work, by their own assurances, with minimal profitability, have also put forward their claims.

One of the experts invited to comment on the situation was Larisa Erina, the Sales Director at “ECO-Culture” agricultural holding.

The Industrial Association of Greenhouse Enterprises, which incorporates complexes producing from 1 million tons of vegetables annually, has sent a proposal to reduce retail prices for vegetable products to the Association of Retail Companies represented by X5 Retail Group, Auchan, Magnit, Azbuka Vkusa, and many other companies.

According to the letter initiators, this measure will allow increasing the turnover of goods in the new economic environment. The decline in demand for fruit and vegetable products is caused by many factors such as the closing of catering facilities as part of the measures to combat the spread of COVID-19, consumers switching to basic necessities, and the overall decline in purchasing power of the population. On the other hand, the production costs have increased – the prices for imported plant protection agents have risen due to the devaluation of the ruble. Today, greenhouse complexes supply products at prices lower than the cost price, while the return of retail chains on a number of positions amounts to 300%.

Larisa Erina reports to the Kommersant newspaper that Eco-Culture holding recommends retail chains to set a markup on tomatoes and cucumbers up to 50%. Currently, this figure exceeds 100%. The agricultural company, as well as other producers, appeals to the chains to enhance the turnover of products with short shelf life by any means, including increasing the number of special offers and discounts.

Meanwhile, the Prime Minister of Russia M. Mishustin is also in favor of possible freeze-up in retail prices for products. However, the members of “Rusprodsoyuz” (professional association of producers) believe that the pricing issue should only be subject to agreements between suppliers and sellers.

For the full text of the article, please see the issue No. 65 of the Kommersant newspaper.