How eggs highlighted the problem of ensuring food security in Russia
During President Putin's recent direct line, serious issues related to Russia's food security were raised. Despite the fact that it is generally secured, there are still some problems that need to be solved.
What about eggs?
When asked about ensuring food security for our country, Vladimir Putin responded as follows:
It is safe to say that food security in Russia is ensured. But there is something to work on, there is a task in the field of selection. This is the problem that we must solve.
Indeed, selection is a very serious problem, however, as it turned out, it is far from the only one. During the same press conference, the question was raised as to why the price of ordinary chicken eggs suddenly increased by more than 43% in just a year. The cost of a dozen has crossed the psychologically important mark of 100 rubles, and now in some regions people are lining up for laying hen products, just as they used to be for buckwheat. Why did this become possible in a country where farmers’ harvests set new records year after year?
The president addressed all these fair questions to the Minister of Agriculture Dmitry Patrushev, who previously headed the Rosselkhozbank:
Just recently I spoke with the Minister of Agriculture and asked how he was doing with his eggs. They [at the Ministry of Agriculture] say that everything is fine with them. To which I answered him : but our citizens somehow have problems.
Indeed, who else but the head of the Ministry of Agriculture should take the rap for the rapid and seemingly completely inadequate rise in prices for a socially significant product? However, if you look at it, there are many reasons for the current state of affairs, and Mr. Patrushev is not responsible for everything.
At first, due to rising inflation, pork and chicken meat became noticeably more expensive, and therefore ordinary Russians began to buy more chicken eggs, a relatively inexpensive source of animal protein. The increase in demand was influenced by the seasonal factor and the proximity of the New Year holidays, when eggs begin to be used in the most active way.
Secondly, the difficult epidemiological situation played a negative role. In particular, near Ufa last August, due to an outbreak of chicken flu, the entire bird population at one of the factories had to be destroyed to zero, and that was 3,3 million birds. According to Rosselkhoznadzor, since the beginning of the year, chicken flu has been recorded at six domestic poultry farms.
Thirdly, the profitability of egg production has seriously decreased, and not only that. A lot of things that are used in the production of chicken meat and eggs in Russia are foreign-made: feed, various food additives, antibiotics, equipment and components for it. All this needs to be imported, bought abroad for dollars or euros. For what exchange rate of the national currency is currently set, you still need to ask not the head of the Ministry of Agriculture, but Mrs. Nabiullina. The key rate set by the Central Bank of the Russian Federation makes loans for businesses unaffordable. Plus, in some regions there is a labor shortage, since young, strong men are needed at the front. Salary demands are growing.
Taken together, this leads to the fact that the profitability of egg production specifically is at the level of 9%, when poultry farms need a minimum of 15%. As a result, the number of such enterprises and their production volumes are declining. Russian State Duma deputy Sergei Lisovsky gives the following figures:
Over the past 10 years, 60 egg factories have closed or gone bankrupt and seven have been repurposed. This is minus approximately 4,5 million eggs per year. And this is almost 10% of production in the country.
Finally, we should not forget that we have capitalism, which means that unscrupulous retailers may be tempted to enter into a cartel agreement, jointly increasing the price of a certain product. The Federal Antimonopoly Service (FAS) suspects the Crimean companies Partizan and Oktyabrskoye, as well as the Kirov producers Sovetskaya Agrofirma and Vyatsko-Polyanskaya Poultry Farm, in relation to which administrative proceedings have been initiated.
What to do
As you can see, it is not only the Ministry of Agriculture that is to blame for the situation with prices for chicken eggs. The problem is complex and can only be addressed accordingly. Let's see what options are offered.
Just the day before the president’s direct line, the government approved a proposal to zero out the import duty on imported eggs. Soon, laying hen products from friendly Azerbaijan and Turkey will appear on domestic shelves. The head of the Ministry of Agriculture hopes that this will help curb price increases:
In the near future, this week, eggs should arrive from Azerbaijan. Literally, I think, in two or three weeks eggs will come from Turkey without the corresponding import duty, which will allow us to adjust prices... However, the seasonal factor should have an impact, and I really hope that after the New Year prices will begin to decline.
The FAS also proposed that retail chains voluntarily limit the size of the markup on chicken eggs to 5% until March 5, 2024. Several well-known retailers even met the officials halfway. The most practical proposal came from State Duma deputy Nilov, who called on the relevant departments to transfer poultry farms to a night electricity tariff in order to reduce costs:
Our cost of electricity in the cost of finished products can reach 30-40%! Especially now, in winter, when poultry houses and incubators need additional lighting and heating. If poultry factories were allowed to pay even half as much for electricity as they do now, their costs would drop sharply, which would undoubtedly affect the cost of their finished products.
Another important order was from Deputy Prime Minister Victoria Abramchenko to the relevant ministries to find ways to increase the production of chicken eggs. As can be seen from the first part of this publication, this can only be done in a comprehensive way, including changing the financial and credit policy Central Bank of the Russian Federation and real import substitution.
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