The TV channel of Russia’s largest media holding, RBC released the latest episode of the Den program. Among the invited experts was Alexander Rudakov, the President of ECO-Culture company. The topic of the discussion was: “Rising Food Prices: Consumer Expectations and Business Suggestions”.
The program host voiced a new initiative from potato producers – to sell small and unsized tubers at a reduced price. This would allow consumers with low incomes to buy this basic necessity food product without affecting their budgets. The reason for such an initiative was a sharp rise in potato prices made by the retail chains with the average price increasing by 40 per cent over the year. The Ministry of Agriculture supported the Potato Union’s suggestion. A similar motion was made by the Fruit and Vegetable Union, namely, to reduce the price of substandard cucumbers.
The issue of rising food prices reached the government level by the end of 2020, which resulted in a draft law changing the rules for price regulation. However, consumers claim they have not seen any change for the better – according to surveys, most Russians believe that food prices in 2021 are rising even faster than they were before.
The experts gathered in the studio discussed a number of pressing issues for every Russian: why prices keep going up, how to stabilize the situation, and what producers and retail chains can do about it.
Alexander Rudakov answered the question about what share of profit the holding loses as a result of retailers’ strict requirements for product sizing. According to him, 10-15 per cent of tomatoes and 6-7 per cent of cucumbers account for substandard products. Besides, when it comes to tomato products, the standards are purely quantitative: for example, a 0.5 cm deviation in the size of a cherry tomato is already considered “substandard”. And while such tomatoes are not inferior in quality to their standard “colleagues,” they still are to be purchased from the holding at half the price.
Another question posed by the host was about consumer concerns related to the new rules for vegetable sizing. What they expect is manipulation with the concepts of “standard” and “non-standard” by sellers and producers. This way, unsized products might be sold at the regular price, with standard vegetables becoming the new “premium category”. The President of the agricultural holding dispelled these fears, saying that the buying power of the Russian people is bound by certain limits – no one will be buying any goods at artificially inflated prices. The idea of selling non-standard vegetables at a lower price, however, seems to be beneficial for all the parties involved in trade relations.
Speaking about the increase in food prices over the last year, Alexander Rudakov stated that as for vegetables (tomatoes and cucumbers), the release price has only increased by 5-6 per cent, basically compensating for the standard annual inflation rate. However, there are seasonal price fluctuations. With the greenhouses consuming more energy for production in winter, the cost of production increases by 2-3 times. This is the reason for the prices of the final product in retail chains to inevitably rise, too.
For the opinions of other discussion participants, as well as experts’ conclusions and forecasts regarding price increases, please watch the full version of the broadcast on RBC channel.