Lower prices for basic foodstuffs could actually only generate massive government subsidies to producers, coupled with price caps on even the bare essentials in the diet. This was stated to Izvestia by Pyotr Pushkarev, a leading economist at the information and analytical center TeleTrade, commenting on the January 11 UN report on the rise in prices for food in the world.
“An alternative way out is the idea of food certificates, which are more commonly called“ cards, ”for low-income families with the ability to redeem them every month for a certain amount. Such programs are already operating for millions of families in many countries of the world, and it seems that no one has yet invented another way to effectively compensate the population for the effects of inflation, ”the economist said.
According to the Food and Agriculture Organization of the United Nations (FAO), at the end of last year, food prices in the world increased by 28.1%. The rise in prices has become the largest in recent years – the cost of all major groups of agricultural products has grown, not just grain and oil. The rise in prices was associated with concerns about the consequences of the Omicron coronavirus strain on international demand, as well as an increase in overall costs for manufacturers, including for energy and transportation. Also, the increase in prices was influenced by the local wheat crop failure and centralized purchases in reserves.
Pushkarev believes that individual products on the shelves cannot fall in price for a long time during the year – unless only during discounts and promotions in large retail chains. The December decline in world prices for sugar and butter was, in his words, “quite insignificant” and most likely did not take long. He linked it to fluctuations in demand at the “local price tops”, a small correction of the order of 3% down and a pause after a high rise, which will end, and within the next three to four months prices will “resume their movement to the peaks.”
The expert pointed out that, according to data from the same UN FAO report, the average value of the food price index was 125.7 points at the end of 2021, which is 28.1% higher than the same indicator of the previous year. The world price index, for example, for dairy products in December also increased by an additional 1.8%.
“Thus, there is a general trend in food prices, it is caused by the excess costs of producers and the depreciation of the purchasing power of both the dollar and the euro, the entire basket of world currencies in relation to material resources, including food,” he explained.
Expectations that inflation in the world has not yet passed its peak are also present in the quotations of shares of large companies trading in oilseeds and grains, including wheat, oats, corn: shares such as Archer-Daniels-Midland continue to break records in January. in anticipation of additional profits, the economist added.
Earlier on January 11, the scientific director of the Institute of Economics of the Russian Academy of Sciences Ruslan Grinberg said that food ration cards are a reality in many developed countries, where they are the norm and do not conceal any additional connotations. He admitted that with a further rise in consumer prices, the government would have to either start subsidizing the production of the most important products, or introduce ration cards.
The State Duma expressed the opinion that there is nothing wrong with keeping food cards. They cited the experience of the United States as an example, where for a long time low-income strata of the population received state support in the form of food packages.
At the beginning of December, Deputy Minister of Industry and Trade Viktor Yevtukhov, on the sidelines of the National Day of Russia at the Expo 2020 exhibition, said that it was not planned to conclude new agreements with retailers and manufacturers to curb food prices, since now work with manufacturers was “quite effective” food, with chains that have “minimal margins.”
In late November, Russian President Vladimir Putin said that the rise in prices in the country has accelerated, which is a sensitive issue for citizens.
The Ministry of Industry and Trade informed Izvestia on October 14 that it recommended that retail chains switch to direct contracts with suppliers of socially significant products to reduce prices.
In July, the head of state announced the aggravation of the situation with prices for basic foodstuffs in Russia. The Kremlin said that the president instructed to monitor the dynamics of changes in retail prices. Based on the monitoring results, appropriate measures are taken.