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All news / Exit Of Foreign Retailers In Russia Ushers In A New Era Of Wholesale Markets

  • 25 May 2022, 09:44

Russia goes Farm To Table in latest moves to reorganise consumer distribution networks and put profits back into the hands of the producersExit Of Foreign Retailers In Russia Ushers In A New Era Of Wholesale Markets

The mass exodus of foreign retailers in Russia from the Russian domestic market is leading to a resurgence of the traditional wholesale markets, and possibly better prices for consumers as middle-men are vacating Russia.

Russia’s Ministry of Industry and Trade intends to revive wholesale and retail markets in the country, where everyone can sell their products – farmers and ordinary citizens, including summer residents. The Russian market is far less rigid than the EU regulated market, which actively prevent sole traders and individuals from selling produce without extensive licensing procedures – an issue that has led to a decline of numerous locally produced consumer products over the years and has instead created much wastage and a deterioration of both variety and quality of crops. In Russian rural areas, even Orthodox Churches often sell produce grown or developed from Church lands, including Dairy, Eggs, and Vegetables, while local varieties are maintained, and traditional recipes kept.

Wholesale and retail markets began to disappear in Russia in the 2000s under the pressure of retail chains, including many foreign invested brands. Today, wholesale and retail markets account for just 4% of Russia’s domestic consumer trade turnover. Viktor Yevtukhov, Deputy Head of the Russian Ministry of Industry and Trade, has stated that such an approach would help stabilize prices by increasing competition in the food market. In addition, the measure will support the labor market through the creation of new jobs. “The creation of modern wholesale markets is necessary,” Yevtukhov emphasized. “Especially given the vast territory of Russia, the difference in natural and climatic conditions, and the dispersal of centers for the production of goods.”

The Ministry of Industry and Trade has developed recommendations on the organization of wholesale and retail markets and sent them to Russian’s various regions, stating that the main goal of developing wholesale and retail outlets once more is to ensure the country’s food security, while also solving other issues. Farmers will be able to sell their products directly to people, without resellers; while creating new distribution channels allows them to concentrate on expanding production. This would reduce consumer prices for agricultural products.

In terms of the regulatory procedures, Farmers and Sellers (including Russia’s famous Babushka’s) will not need to register as an individual entrepreneur or legal entity, meaning everyone will also be able to sell their products. Local veterinary and sanitary examinations will be located at the wholesale facilities to clarify and monitor the healthy consumption status of products sold.

Olga Bashmachnikova, Vice President of the Association of Peasant (Farmer) Farms and Agricultural Cooperatives (AKKOR) has stated that “The Ministry of Industry and Trade initiative is useful, creating an additional sales channel for small and medium-sized farms will help expand production. Increased competition will put pressure on prices . Now it is quite difficult for farmers to cooperate with retail chains, as well as participate in public procurement. Farming entrepreneurs have been trying to work with large wholesale markets, but the cost of renting a place and other services has often made the sale of goods unprofitable.”

The All-Russian Research Institute of Labor also considered the initiative useful, saying that “Each producer, regardless of whether it produces goods or provides services, needs its own sales market, where the products it offers will be in demand, and where there is potential for growth and expansion. Without this, you cannot build a successful business. Therefore, the creation of sales channels that are understandable to manufacturers is essential. The implementation of these initiatives will help stimulate the expansion of agricultural production and increase volumes for the sphere of transportation, storage, processing. This can support jobs in these areas and contribute to the growth of jobs.”