“Export restrictions are the simplest bureaucratic solution”

The founder of the Mosselprom agricultural holding, State Duma deputy, told Kommersant about approaches to curbing food inflation Sergey Lisovsky.

— Several new measures have recently been announced to curb the rise in food prices, including restrictions on the export of poultry meat, eggs, durum wheat, and facilitating the import of chicken meat and eggs into the Russian Federation. To what extent, in your opinion, are these initiatives justified and what effect can be expected?

— Although the Minister of Agriculture (Dmitry Patrushev.— “Kommersant”) told the president about the absence of economic prerequisites for rising prices for poultry meat, but they still existed. The development of such a situation could have been foreseen. Manufacturers have been faced with rising costs for many months due to rising prices for imported machinery, equipment, materials and a sharp rise in diesel fuel prices. All this was reported to the Ministry of Agriculture, but until recently everyone was happy with everything.

In addition, the rise in prices was caused by an increase in the purchasing power of the population and the volume of consumption. Export restrictions in such conditions are the simplest bureaucratic decision, which, with a total supply of poultry meat of 5 million tons, will not have an effect. But it will create Russia’s reputation as an unreliable supplier, erasing many years of efforts to enter foreign markets.

— What alternatives might there be?

— At the first stage, it would be correct to open opportunities for foreign producers to supply a certain volume to the Russian Federation without duties. But this should be strictly temporary. Duties on grain exports were introduced temporarily to stabilize domestic prices, but are now considered permanent by the Ministry of Agriculture.

In general, production needs to be stimulated. There has been a surplus in the poultry market in recent years, and companies are now wary of expanding capacity. It is worth considering the return of canceled subsidies for broiler producers, which will support companies in the face of rising costs. But the capabilities of the Ministry of Agriculture are also limited. For example, the ministry cannot interfere in issues of product sales.

— Recently, the government again started talking about the need for manufacturers and networks to enter into long-term supply contracts. How effective can this be?

— Retail chains are not interested in fixing volumes in long-term contracts, although they stipulate the manufacturer’s obligation to deliver batches of goods and a penalty for under-delivery. The State Duma is currently considering a bill that would allow a supplier to be fined for failure to fulfill a network order only if the manufacturer has agreed to fulfill this volume of the order.

— You mentioned duties on grain exports. What effect do you see from this measure now?

– With such a harvest as in Russia, it is necessary to export as much as possible. Wheat prices in a number of regions have dropped to cost levels and below. In my native Kurgan region, third-grade wheat costs about 12.5 thousand rubles. per ton at a cost of 12–13 thousand rubles. per ton, the situation beyond the Urals is worse.

Due to the introduced grain export quotas, competition among traders has decreased. If in the south of the country 30–40 potential buyers could previously come to farms, now there are only a few, and in some regions the share of large traders may be close to a monopoly.

But by directing the money received from export duties to farmers, the Ministry of Finance can report on the expansion of state support for agriculture, although in fact the money had previously been withdrawn from the industry.

— Some experts talk about increasing government intervention in the agro-industrial complex. Do you think this is true? And how justified is this approach?

— It’s one thing to act as a regulator and arbiter, this is how the authorities responsible for agriculture work in many countries, establishing strict rules of the game. Another thing is interference in business, which the Ministry of Agriculture has become interested in in recent years.

Interview conducted by Anatoly Kostyrev