Is buckwheat running out?

Retailers are expecting shortages and rising prices. kommersant.ru writes about this.

Retail chains have begun to receive notifications from suppliers about disruptions in buckwheat supplies: the impending shortage is explained by the low harvest in the Altai Territory, as well as the fact that farmers are in no hurry to sell stocks, expecting a further increase in market prices. In retail, the cost of buckwheat, depending on the category, can increase by one and a half to two times, retailers say. The last time this happened was in 2010, when President Dmitry Medvedev instructed the FAS to “punish speculators.”

Many federal retailers received warnings about impending disruptions in the supply of buckwheat this week. Oksana Tokareva, head of corporate and external communications of the Russian division of Metro Cash & Carry, said that all suppliers of buckwheat, except the Mistral company, stopped shipping goods from October 27-28. “Because of this, in particular, we cannot receive our private label, which is produced by Angstrem,” she added. Member of the board of O'Key Group of Companies Marina Kagan said that shipments of buckwheat to the chain's stores were still continuing, but at meetings the distributors made it clear that they would soon not be able to fulfill their contractual obligations in full. Auchan Russia External Communications Department Manager Andrey Tvorogov reports that the retailer is receiving notifications from all of its buckwheat suppliers about an increase in purchase prices by an average of 50-60%. The head of the public relations department of X5 Retail Group (Perekrestok, Pyaterochka, Karusel chains) Vladimir Rusanov says that the company has not yet been notified of the disruption in the supply of buckwheat, but a number of counterparties have reported an upcoming increase in prices for it. “The growth could be 18-20% in the upper price segment, but in the lower segment they also want to increase the selling price by one and a half to two times,” said Mr. Rusanov. According to him, X5 does not yet accept the new conditions of suppliers and is checking whether they are justified: “We have suspicions that there may be speculation.”

The last time a spontaneous increase in prices for buckwheat in the Russian Federation was observed was in 2010 (for details, see the reference). Then retail prices increased two to three times over the year. Suppliers cited drought and crop failure, but the Federal Antimonopoly Service (FAS), based on the results of inspections, came to the conclusion that the increase in costs was influenced by “clear collusion in the wholesale chain.”

Suppliers associate the future shortage of buckwheat with harvest failure in the Altai Territory, retailers said. “They also say that individual producers are in no hurry to sell existing stocks, waiting for the market price to rise even more,” says Ms. Kagan. The manager of one of the largest buckwheat producers in Altai confirms that the situation with the harvest this year is really difficult. “Due to constant rains, we managed to collect only 15-20% of the harvest. Now the snow has already fallen, so it is impossible to complete the harvest,” complains Kommersant’s interlocutor. According to him, a real shortage and increase in prices for buckwheat could begin in two months: the cost of the product could increase four to five times. Director for Development of the Association of Manufacturers and Suppliers of Food Products "Rusprodsoyuz" Dmitry Vostrikov also says that in the Altai Territory, where about 45% of buckwheat is produced (362.8 thousand tons were harvested in 2013), most of the harvest lies under snow, and Agricultural producers have suspended the sale of remaining stocks of this type of grain. “This is already leading to a significant increase in prices; processors are now receiving offers from farmers to buy buckwheat at a price of 50 rubles per 1 kg instead of the previously existing price of 15 rubles,” notes Mr. Vostrikov.

According to Rosstat, in 2014, the area under buckwheat in Russia amounted to 1.01 million hectares, or 93% of the 2013 level. The press service of the Ministry of Agriculture told Kommersant that, according to updated data from the governing bodies of the agro-industrial complex of the constituent entities of the Russian Federation, the gross harvest of buckwheat in 2014 is projected at 0.8 million tons. “This is at the level of last year and should allow us to provide the processing industry with raw materials.” , the ministry said. They also emphasized that they do not have information about possible interruptions in buckwheat. FAS Kommersant also noted that they have not yet received any requests regarding interruptions in the supply of buckwheat.

State Secretary, Deputy Head of the Ministry of Industry and Trade Viktor Evtukhov, in turn, told Kommersant that although the ministry does not note an increase in prices for buckwheat, nevertheless, the department predicts possible fluctuations in its supplies due to frosts in Altai.

Buckwheat crises in Russia. Background:

In 1999, against the backdrop of rising fuel prices, crop failure and low grain reserves, producer prices for buckwheat increased by 336%. Retail prices increased by 176%. The higher harvest of the new season helped stop the rise in prices.

In 2003, due to a bad buckwheat harvest, grain had to be purchased abroad. A record 100 thousand tons were imported from China. The rush that arose in retail quickly subsided. During the year prices increased by 16%, but in 2004 they decreased by 8%.

In August 2010, due to drought, shortages of buckwheat in stores began. By the end of the month, the purchase price reached 46 rubles. for 1 kg, although back in April it did not exceed 23 rubles. The retail price of buckwheat reached 140 rubles. for 1 kg. President Dmitry Medvedev instructed the FAS to “punish speculators.” The agency began an unscheduled inspection of the largest suppliers and sellers of this product, fining retailers and wholesalers for abuse of position and collusion. In St. Petersburg, to combat high prices for buckwheat, Young Guard activists organized raids on grocery stores.

For the first time in seven years, Russia was forced to import cereals. However, after a few months, prices continued to rise. In total, according to Rosstat, from July to February the cost of this cereal in stores increased by 189%. Only with the beginning of sowing did prices go down.

Let us add that RBC published a rating of Russian regions for buckwheat harvesting in 2013: