Translated material
Bread planted a pig
Russia is not threatened by a grain shortage, but by a sharp rise in meat prices
Russia will have bread, but no meat . This conclusion was reached by participants in a briefing at the Rosbalt agency, dedicated to the situation on the Russian grain market. In their general opinion, the “price hysteria” that the rush demand for grain has led to will have a much greater impact not on the cost of a loaf of bread, but on the final price of meat and milk. And this, in turn, will have a much stronger impact on the cost of the food basket.According to experts, bread consumption in Russia is steadily falling. First of all, this is due to the growth of household incomes and the “spreading over” of increased consumption of bread into meat. Grain prices are strongly reflected in the price of livestock feed, which accounts for 70% of the cost of meat. For every kilogram of live weight of a domestic pig, approximately 4.6 kg of feed is consumed. This is twice as high as in Europe (the global norm is 2.6 kg). “But we are still far behind it technologically,” says Arkady Zlochevsky, president of the Russian Grain Union. “Despite the national project for the development of the agro-industrial complex.”
“Grain prices in the EU are also prohibitive,” admits Mr. Zlochevsky. “But there it is compensated by government subsidies.” We, according to him, create unequal conditions for our livestock farmers.
However, there is also a positive aspect in high grain prices, the expert believes: “The more expensive the grain, the more high-tech feed is produced; the cheaper, the less technologically advanced.” Protein feeds are considered “high-tech”. And since the main suppliers of livestock products in Russia are private farms, the animals’ diet consists mainly of carbohydrates, which makes the meat very fatty. “Such meat does not meet the requirements of the meat processing plant,” says Arkady Zlochevsky. “And it becomes unprofitable to produce it given high grain prices.”
The reason for the jump in prices is drought and crop failures in many countries around the world. And natural disasters caused serious damage to the grain regions of Russia. However, in some regions the heat affected significantly less and the yield there is even higher than last year. In total, the gross grain harvest in Russia, according to experts, is expected to reach 76 million tons in 2007, which corresponds to the forecasts of the Ministry of Agriculture. “This is slightly lower than last year,” explains Andrey Sizov, general director of the Sovekon analytical agency. “But it’s not critical for the food sector, but will only affect the country’s export capabilities.”
There is no talk of a grain shortage in Russia, but the problem of its transportation still worries flour millers and bakers. According to Nikolai Rybakov, business manager of the Russian Union of Flour and Cereal Enterprises, railway tariffs “completely cut us off from the distant regions where we buy wheat for Central Russia, where 52 million people live.” “And if Siberia used to supply flour here, then the starting prices became such that this business turned out to be unprofitable,” he explains. - Thus, the Ministry of Agriculture names the same prices for grain, and after we bring it to Moscow, the price increases from 5,000 rubles. per ton up to 7500.”
To give more transparency to the market, futures trading on the Grain Exchange will begin this fall. According to the organizers, it will help grain traders and the state better understand prices. “We urgently need to organize a futures exchange, since grain farmers will not make cash deliveries of grain through the exchange,” said Arkady Zlochevsky. “However, it will work seriously when risk insurance is guaranteed.”
Russian communists promise to hold mass protests if the government does not take control of the situation with rising bread prices. Since the beginning of the year, bread has risen in price in a number of regions by 5-10%; experts predict that prices will rise by another 20% by the end of the year, and in some regions by 50%.
“We will hold special protests related exclusively to rising prices for grain products,” Deputy Chairman of the Communist Party of the Russian Federation, State Duma deputy Ivan Melnikov told RIA Novosti . According to him, not only pensioners buy bread and therefore the protests will be “unprecedentedly massive.” Mr. Melnikov did not specify what actions the Communists are planning, but said that the Communist Party of the Russian Federation will take them if, after the all-Russian action of the Communists in support of the village and its workers, planned for August 23, the government does not take control of the situation with rising prices.
The Minister of Agriculture of the Russian Federation, Alexey Gordeev, yesterday, at a meeting with Russian President Vladimir Putin, said that the government is monitoring the situation on the grain market and “has a full range of opportunities to maintain prices.” Last week, Mr. Gordeev reported that in the first half of 2007, inflation was 5.7%, and bread prices rose by 4.7%. Experts cite drought as one of the reasons for the rise in bread prices, which has caused significant damage to grain crops this year, in particular in the Volgograd and Rostov regions. According to the forecast of the head of the Ministry of Agriculture, in the coming years, prices for grain and bread will rise due to an increase in population, increased demand for grain products and the production of biofuel.
The communists, in turn, consider the main reasons for the rise in bread prices to be the “indifference” of the authorities to this problem and “uncontrolled pricing of bakery products.” As stated in the statement of the presidium of the Communist Party faction in the State Duma, signed by party leader Gennady Zyuganov, intermediaries working with bakeries “seek to provoke a rush demand for bread and increase the price of it several times.” And the “connivance of the authorities” allows intermediary grain traders to “create arbitrary pricing.”