World meat industry news

Russian manufacturers are rewriting prices, the ruble has shown the strongest fall over the past month. At the same time, the Ministry of Industry and Trade states that there are no prerequisites for an increase in the cost of goods in the near future, and retailers will keep prices down, including by reducing their own margins. How did the fall of the ruble affect production? And what are the problems faced by the business? Aelita Kurmukova found out.

No matter how much they talk about import substitution, Russian production still cannot get off the currency “needle”. And it is not easy to keep food prices against the backdrop of the depreciation of the ruble.

The euro broke through the level of 100 back in July. And almost all equipment at domestic enterprises is foreign-made, said Sergey Yushin, head of the executive committee of the National Meat Association:

“There is practically no Russian technology, there is very little of it. In order to be competitive, we built all our enterprises with the help of the most advanced foreign companies, which can be counted on the fingers of one hand.

In addition, now it is difficult to purchase spare parts, but they need to be changed, otherwise everything will fall apart. As a result, manufacturers pay exorbitant prices for them and buy them for future use.

In addition, there is an additional burden on working capital, because, among other things, loans are becoming more expensive. The exchange rate also affects the cost of both Russian and foreign veterinary drugs.”

For foreign currency, Russian producers buy, in particular, raw materials, amino acids, vitamins and even seeds. They are brought from Holland, transactions are made in euros. And there is nothing to replace such products yet, market participants share.

At the same time, the Ministry of Industry and Trade states that there are no preconditions for price growth yet. According to the deputy head of the department Viktor Yevtukhov, for some positions it is even possible to reduce them, for example, seasonal vegetables and meat.

At the same time, not only imported raw materials, but also Russian ones, are becoming more expensive, Alexey Sitnikov, president of the Russian Greenhouses Association, shares:

“We are afraid that fertilizer producers will start raising prices. These risks exist, although they were at a high level anyway. During the COVID-19 pandemic, Russian players took advantage of the rush demand on world markets, increasing the cost of their products, regardless of the exchange rate, by 30-40%.

So far, they have difficulties with exports and, I hope, they will leave the domestic market alone.”

Meanwhile, the main problem of Russian enterprises is not even currency dependence, but the shortage and outflow of personnel. The working personnel goes, in particular, to the defense industry, where salaries are different. And in order to stop migration, businesses are forced to raise wages faster than inflation.

Kommersant FM's interlocutors claim that at poultry enterprises, for example, salaries are now raised not once a year, but three times - by 10-15%. And this is an additional burden on the labor fund.

But farmers are replacing Russians with labor migrants from the CIS countries who are ready to work for 50-80 thousand rubles. per month. There is also a demand for personnel in the newly annexed regions. And it is not always possible to compete with them, says the founder and head of the Kabosh Group of Companies, which produces cheese, Dmitry Matveev:

“Two employees just put us in front of the fact that they quit in a day. They said they were leaving for Mariupol, where they were immediately offered twice as much money and an apartment to live in.

We are unable to provide the same conditions. We asked that people before dismissal worked for the prescribed two weeks, but we were told that in this case they would issue a sick leave. It turns out that the state creates preferences in new territories, but what should we do?”

But if it is still possible to find new employees, then it will not be possible to completely abandon currency dependence. In Russia, you can make your own machines, equipment, the country has already learned how to cook cheese, and American steaks have been replaced by Voronezh ones. But coffee beans will never grow here, Vitaly Muravyov, president of the Pobeda confectionery factory, emphasized:

“We are definitely producing more ourselves, but we are not cut off from the global economy. For example, sugar is grown in Russia and in neighboring countries it can be sold for 70 cents, but here the ruble is falling. And who will sell it here at 35 when it can be sold for export at 70?

Of course, no one will increase the cost of products for the consumer by 40% at once. Raise prices will be parts, 10 percent.

We can only hope for retaliatory measures to stabilize the ruble exchange rate, this clearly needs to be done. Now we have let go of all this, foreign exchange earnings can not be sold and foreign currency cannot be imported into the country. Well, what do we have?

In the meantime, the Ministry of Industry and Trade has suggested that retailers themselves limit margins on socially significant products. True, how long the margin of safety of retail chains will last is still unknown.