World meat industry news

After a sharp rise in prices at the beginning of the year due to a failure in supply chains, high-profile and not very brand departures, rush demand in different segments of goods, starting from mid-summer, Rosstat began to report the beginning of deflation (price reduction).

First of all, this applied to food products: if in March sugar cost 120 rubles per kilo and its sale "in one hand" was limited by retailers to one or two kilograms, now you can safely buy it in any quantity for 60-70 rubles. However, prices began to decline for other groups of goods: cars, and partly equipment. Under the influence of what factors prices are currently being formed in Russia and what will rise in price in the future, the Prime agency interviewed experts.

In the spring, suppliers and manufacturers explained the rise in prices by the sharp depreciation of the Russian currency: finished goods purchased abroad depended directly on exchange rates, and, for example, the rise in prices for eggs was associated with imported feed and medicines.

Part of the increase in prices was due to a shortage of imports: the refusal of foreign logistics giants to work with Russia after the start of the special operation led to the fact that a huge amount of commercial cargo simply did not get into the country. For example, for this reason, the price tags for cars in showrooms grew much faster than on the official websites of dealers, and those models that were expensive to buy for two million a year ago were offered to buyers at 3-3.5 million rubles.

Now we are witnessing the strengthening of the Russian ruble against the dollar. It would seem that imports should become cheaper. But no.

As Natalya Vashchelyuk, chief analyst at Sovcombank, told Prime, the strengthening of the ruble has become a deterrent for the growth of producers' costs.

“If in March the average dollar exchange rate was 104 rubles, then in June-September it was about 60 rubles. In addition, the export of part of Russian products fell under export restrictions imposed by both Russia itself and unfriendly countries,” she noted.

This led to the fact that the growth of purchase prices for some goods or raw materials in the domestic market slowed down or stopped. This may include wood and wood products, vegetable oils, certain types of feed for farm animals or petroleum products.

As the association of dairy producers Soyuzmoloko commented on the situation with retail prices, since the beginning of the year, the increase in prices for this category of products amounted to 14.3%, but by the middle of the year, prices are really slowly stabilizing: in July, a decrease of 0.3% was noted over the month , in August - by 0.2%. However, this is not due to lower costs or cheaper raw materials, but to the fact that dairy products are a socially significant category and react sharply to changes in household incomes.

"Compared to the beginning of 2017, the cost of milk production in August 2022 remained 46.9% higher, and in July 2022 - 47.1% higher. Average purchasing comparable prices for raw milk since January 2017 increased by only 23.3% to August 2022. According to Rosstat, the price of marketable milk was 33.2 rubles/kg excluding VAT in August 2022. This is a historical maximum not only for this month, but for the whole Before that, the highest value of the price level in August was reached in 2021 - 26.7 rubles / kg.

At the same time, other types of costs - on the contrary - increased. “The cost of rail transportation (+20% yoy), pipeline transport services (+30% yoy) increased. Also, the increase in costs was caused by a change in logistics routes and suppliers,” said Vashchelyuk.

It turns out that with a decrease in some costs, manufacturers begin to cost more than others. "The rise in prices for energy resources (electricity, diesel) leveled the decrease in feed costs," cites the situation in domestic animal husbandry as an example, Associate Professor of the Department of State and Municipal Finance of the Russian University of Economics. G.V. Plekhanova Maria Dolgova.

In her opinion, those manufacturers who use foreign components, additives, ingredients for the production of their goods are in the most difficult situation. There are either no domestic substitutes, or there are few of them. Imports have been discontinued or significantly reduced, substitute products from other countries may differ in quality. "All these factors do not allow to reduce the cost," - said the economist.

Another reason why Russian importers cannot buy cheap goods abroad is inflation in producing countries. "Imported goods become more expensive due to inflation in producing countries, which affects their ruble prices even if the Russian currency strengthens," Dolgova explained.

It is not worth expecting that prices will decrease for all or most goods. Experts agree that producers' costs will continue to rise. Including - and due to import substitution, said Alexander Abramov, head of the laboratory for the analysis of institutions and financial markets at the Institute for Applied Economic Research of the RANEPA.

“Now import substitution is at the initial stage of its development and it is premature to say that costs have stabilized. What we are now seeing in import substitution is the preservation of a fairly good range of goods, but mainly due to parallel imports and establishing the work of foreign companies that have switched under the control of Russian owners. So far, these companies do not incur any new large costs to support the production of goods. These costs will appear in the future and will require investment, "he predicts.

In his opinion, most of the costs associated with import substitution are borne by producers of food products, household chemicals, software, many industries of consumer goods, electronics, automobiles, the pharmaceutical industry, and paper production. But Abramov does not predict price increases due to logistics violations.

When asked by Prime about whether it is worth waiting for a rise in prices for dairy products, Soyuzmolok answered that they do not predict sharp jumps. “Today we see that the Russian economy is faced with new challenges that will have a negative impact on the well-being of the population and the level of economic accessibility of goods and services. Rising prices for dairy products are always associated with effective demand from the buyer,” they explained and added, that expect a shift in consumer demand towards traditional dairy products.

“The most likely weakening of demand is for modern dairy categories, including the most expensive products from the dessert group, as well as cheeses and butter,” the organization said.

At the same time, Vashchelyuk from Sovcombank adds that the current situation, when some goods become more expensive, while others become cheaper, will continue in the coming months.