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Contractee: in Spite of the West eat bad, but expensive

Контрсанкции: Назло Западу питаемся плохо, но дорого

The policy of import substitution in agriculture have stalled. Thoughtlessly increase production of everything, and now farmers do not know what to do with products: domestic markets overstocked, and the external closed. A fee for these experiments the authorities and business is completely shifted onto the shoulders of buyers and taxpayers.

Paid 600 billion in inefficiencies

Department of studies and forecasting of the Central Bank, headed by renowned economist Alexander Morozov, in his study “what do the trends” making extremely pessimistic predictions about the development of agricultural markets in Russia.

Analysts note that the last four years of counter-sanctions in General had a beneficial impact on domestic agriculture. However, the role of purely economic factors should not be overestimated: analysts of the Bank noted that the last four years kept good weather, it was not harmful to the crop droughts or floods.

On many commodity positions, we are now able to provide for themselves (i.e. not dependent on imports), and markets chicken, pork, sugar, potatoes and all — the crisis of overproduction. So also the prices closer to the world.

Time would seem to work for export. But in global markets for Russian products are still not too competitive (except traditional commodities — grain or sunflower oil).

To the products of Russian agriculture sold abroad need not just quantitative, but qualitative changes and deep technological modernization of production and increasing internal efficiency.

And now the most unpleasant — with you about our wallet. For the modernization of agriculture, we pay you, out of my own pocket! The Central Bank even calculated how much it was. For example, in 2014 each employee had overpaid for the consumption of more expensive Russian products circa 1935 rubles, and by 2016 the amount of the overpayment was increased to 4120 rubles per person.

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In terms of the entire population of Russia the total loss of the consumers has increased over the three years from 278 to 604 billion. To be clear: this is the money that the buyer paid for the domestic foods — more expensive and often of lower quality than imported ones. First of all it concerns the three items noted in the Bank: beef, dairy products and greenhouse vegetables.

Who would refuse a 20% yield?!

Lower prices on food over the past four years was achieved in Russia only by one factor — the producers of “fat” years had accumulated a good stock returns. And in terms of import price growth outpaced input costs of enterprises. Plus more and the state has provided huge support to the budget. In the end, for example, in 2015, the profitability of Russian agriculture has been a phenomenal 20%. But it is — once again — at the expense of customers and taxpayers.

Now to maintain high profitability in agriculture is no longer the urine — many households lost the stimulus to the expansion and modernization of production. Still can’t compete with imports on price greenhouse vegetables, sugar, dairy and beef.

The Central Bank predicts that food prices will inevitably rise. More recently Russian products could somehow compete on world markets because it was cheaper. And she, in turn, was associated with lower cost of land (in comparison with the West) and the low remuneration of farmers. But the land in Russia is expensive, and wages are rising. This means inevitable rising prices!

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One of the trends that analysts of the Central Bank, is industry consolidation: are small farms will inevitably be absorbed by the larger and more successful.

If at the end of last year the inflation rate was 2.5% (official data), we can now return to the performance of 4%.

What to do?! The Department Alexander Morozov gives a very short answer to this question. The old model of “self-reliance”, which was chosen by the Minister of agriculture Alexander Tkachev, completely exhausted. Today we need not just to increase the production of anything and everything — from greenhouse cucumbers to Turkey — and deal with the re-equipment of enterprises. Then the prices will go down and product quality will grow!

Affected by the sanctions and the destruction of small business

— Food inflation in 2014-2015 and the truth was very high (15 and 14% per year). Although I would not say that, at the household feel that the prices have doubled, probably more like 40%, — shares with “Free press” senior researcher, Institute for economic policy, member of the Board of the Foundation “Liberal mission” Sergey Zhavoronkov. This wild inflation was the result not just of sanctions, but, for example, government policies on the destruction of markets and small businesses. Plus printing money in order to give the state-owned banks and state-owned companies to pay off foreign debt in conditions of inability to Finance it (again, because of the sanctions). Affected the growth of prices of import component in the products (for example, the same imported beef in the sausage) because of the almost two-fold devaluation of the ruble in 2014.

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