Runaway inflation of foodstoff prices hits Russia hard

[K. A. Pital]

Russian food producers to freeze prices - agriculture minister-1
21:53 | 15/ 10/ 2007

Print version

(Adds details, background in paras 4-7)

MOSCOW, October 15 (RIA Novosti) - The Russian government has agreed to stabilize prices with associations representing food producers, the agriculture minister said on Monday.

"We held talks with an association uniting large network companies and an association of food producers. They are ready to undertake commitments, as self-regulating organizations, to stabilize prices and rule out speculative deals," Alexei Gordeyev told journalists after a Cabinet conference.

"They are ready to agree to fix, or, as you say, freeze prices," he said.

Gordeyev said Prime Minister Viktor Zubkov had already instructed the relevant ministries, departments and governors to rectify situations where retailers priced similar products entirely differently. "This is disorder," Gordeyev said, adding that there was an unexplainable growth of unjustified price hikes on foodstuffs.

The agriculture minister also said the government was already taking specific measures to stabilize food prices, referring to customs and tariff regulations.

Gordeyev said earlier in the day that the Russian government would reduce import duty on milk and dairy products from 15% to 5% for six months. Timeframes for introducing the new import duties are currently being discussed.

Food price hikes have accelerated in Russia over the last few months, following trends on global food markets. According to Russia's State Statistics Service, the fastest growth in September was demonstrated by rapeseed and soybean oil prices (13.5%), pasteurized milk (9.4%), fermented milk products (7.9%) and curd (7.4%-7.5%).

That's only part of the whole story.

Retail prices for foodstoffs have skyrocketed in Russia since January 2007, for stuff like bread and milk, twice or more (for example, milk jumped from 12-15 roubles to 30, bread from 7-10 to 14-16 roubles), and your humble servant was an observer.

Russia, FYI, isn't food sufficient. 25% of milk is imported in dry stoffs, like African "banana republics" do, a large part of meat and chicken also are since the animal farming industry is heavily damaged. Moscow depends on food imports by 40-60% according to various analysis.

Also, Russian grain exporters have already exported 13 million tons from the previous crop and 10 million tons from the current crop to the West, making the remaining reserves too little to support the demand. I guess it's good for business to sell food to First World countries, which are partly guilty of the situation - not least due to the "bioethanol, PROFIT!" ideas.

The explanations from our ministers are very assuring. For example, one of them is "Russian businesses are engaged in conspiracy to raise products". Very nice. The fact that some people are on starvation levels now, and St.Petersburg administration decides to introduce talon rationing for low-income citizens must be just a side effect of that innocent shit. Of course, hardly anyone will be prosecuted, since large-scale retail networks and stock marketeers in the light and food industry have shitloads of money for bribes.

Another explanation, and a rather unsettling one, is the rise of bioethanol production in US, Brazil, etc. Essentially Russia is being pushed to a food crisis because some shitheads want to drive their huge private cars. Oooh, I'm sure some car buyers in the US do not feel a responsibility for us here trying to cope with skyrocketing milk, bread and meat prices - all due to skyrocketing GRAIN prices. Well, mister Bush, oil cartels and car companies, what did you think when you lauded your "great solution" to the "fossil crisis"? That you can get your benzin by literally starving people?

I'm fucking pissed. I'm in the middle of that right now. Oh, our minister of agriculture said he'll lower milk import tariffs. What are they? 10%. 10 fucking percent. How are you going to stop a 60% inflation (and the year is not yet OVER) with reducing a 10% tariff? I want to summarily execute our government right now. Fucking talking heads.

I'm in the middle of a fucking economic crisis that unfolds because of callous business magnates both overseas and in Russia, and holy fuck I'm pissed.

[Tanasinn]

Another explanation, and a rather unsettling one, is the rise of bioethanol production in US, Brazil, etc. Essentially Russia is being pushed to a food crisis because some shitheads want to drive their huge private cars. Oooh, I'm sure some car buyers in the US do not feel a responsibility for us here trying to cope with skyrocketing milk, bread and meat prices - all due to skyrocketing GRAIN prices. Well, mister Bush, oil cartels and car companies, what did you think when you lauded your "great solution" to the "fossil crisis"? That you can get your benzin by literally starving people?

It hardly seems that foreign countries should hold themselves responsible for your country's inability to feed itself.

[K. A. Pital]

It hardly seems that foreign countries should hold themselves responsible for your country's inability to feed itself.

Oh, yes. I just forgot - if a given territory cannot give enough agricultural produce to feed the population of a country, it's the fault of the population and they can die.

Well, don't get me wrong, but making fuel for machinery out of food when one million people in the world are still in hunger and more will plunge into hunger yet with the food crisis, is callousness of the highest order.

Apparently there's something wrong when an exporter exports his grain to the First World and people die. That's criminal neglience at least. But of course you're not at fault to buy it and drive demand up! You're just offering him more money, so that he would sell the grain to you regardless of whether people die or not! That's "free market" for you! And of course you're not at fault for making people use large agricultural areas, like Brazil, to make fuels - after all, you just offer them money to stop making foods and make fuels! It's their fault entirely!

If that isn't deadly callousness, I don't know how to call that.

[Admiral Valdemar]

The whole world is experiencing this, so don't worry too much. It's good to be in company with a problem.

[Einhander Sn0m4n]

Why did America have to choose corn when there are better options like jatropha and hemp? I get the feeling I'm about to answer my own question.


Sometimes I wonder whether it's not an if, but a when for a RAR World-declares-War-on-America scenario.

[K. A. Pital]

The whole world is experiencing this, so don't worry too much.

Thanks. In all honesty. I'm quite certain that Third and Second world will be the first to pay up, but I guess food prices aren't easy on Britain either...

But whereas you can prolong and even avoid that by buying scarce food, since you have greater purchasing abilities... we don't have such a chance. Since global decrease in food production will make food scarce, the highest bidders will be the last to get the most serious effects, and they would not be as dire.

[Colonel Olrik]

Yes, the prices have increased this year in Munich as well, for some food significantly, but of course that doesn't really impact how people eat in Germany, the same way oil prices don't affect the number of BMW's, Mercedes and Audi's on the road. For people to wake up prices still have to increase a lot.

[Dartzap]

Food prices here have been steadily rising over the last decade or so, although, so has the purchasing power, so its not as noticeable, but people are always grumbling about it.

[salm]

AFAIK food prices have been going down in the last couple of decades around here. The first increase of prices was this year.

[fgalkin]

The explanations from our ministers are very assuring. For example, one of them is "Russian businesses are engaged in conspiracy to raise products". Very nice. The fact that some people are on starvation levels now, and St.Petersburg administration decides to introduce talon rationing for low-income citizens must be just a side effect of that innocent shit.

Are you fucking shitting me? That is just insane.

Have a very nice day.
-fgalkin

[K. A. Pital]

Are you fucking shitting me? That is just insane.

Why should I? It was on the TV and in the newspapers. Low-income citizens in SPb receive rationing.

Oh, and just fresh from RIA(n) - some regions started emergency one-time payments of 500 roubles for low-income citizens to help them buy food.

Here are regional emergency policies implemented by regional governments:
SPb: talons for poor.
Tymen: 500 rouble payments.
Kuban: forcible top price levels.
Tula: set limit for 10% price increase for retailers.

[K. A. Pital]

According to Yuri Rakov, the chamber of commerce SPb chairman, the system is being launched by SPb government buying additional "emergency grain" from state reserves. Rakov said that it "is possible to introduce card rationing, - and then corrected himself. - no, that sounds badly. Let's call that food talons, like in the USA, for low-income families".

[K. A. Pital]

Technically though, I should yet spare my woes.

Central Asia is soo fucked right now. Having around 20 million in hunger already, they are now falling into a literal abyss of a food crisis - prices for bread in Tajikistan, which has 2,6 million in hunger from 6,5 million population (FAO), have risen six times since July 2007. All because grain world markets have "more demand", and now grain from neighboring Kazakhstan is rapidly becoming out-of-reach for other Central Asia countries. Since July, additional 500,000 people have fallen into the extreme hunger zone in Tajikistan due to the hike. Wait till you see what happens when the people's miserable savings run out.

Kazakhstan dares to sell off major quantities of grain to the West, when it's own situation is 5,25 million in hunger out of 15 million (FAO).

In total, the CIS boasts 38,15 million in hunger per the FAO study (excluding Russia). This number would by now increase due to the crisis tendencies in Central Asia. And we are next on the shit-hitting-the-fan list.

[Admiral Valdemar]

The world never went hungry because of lack of food. Price, however, is more than reason enough.

Too bad the lack of food thing may kick in if top soil, water and climate problems get really bad.

[Kanastrous]

Well, don't get me wrong, but making fuel for machinery out of food when one million people in the world are still in hunger and more will plunge into hunger yet with the food crisis, is callousness of the highest order.

One might also propose that funneling billions of rubles' worth of oil, gas, and weapons/technology exports into vainglorious buildups and re-equipping of military forces, is some form of callousness, too.

[Kanastrous]

Why did America have to choose corn when there are better options like jatropha and hemp?

I don't know about jatropha, but thanks to the asinine "War on Drugs" it is virtually impossible to get the Feds to permit the commercial cultivation of hemp crops - including hemp strains that have zero, nada, no pharmaceutical employment, of any kind, at all.

The US used to be a world-leader in cultivating hemp for fiber and rope; anti-marijuana hysteria starting in the 1920s put an and to that whole industry*. Thank Anslinger and Hearst, who held his leash, for that.




*Except for a brief resurgence during WWII, when even the anti-drug whackies were compelled to admit how useful hemp-fiber was.

[K. A. Pital]

One might also propose that funneling billions of rubles' worth of oil, gas, and weapons/technology exports into vainglorious buildups and re-equipping of military forces, is some form of callousness, too.

If you noticed, I'm not a fan of the state of things in my country, or of the people who run it. But oil for food is also a Ricardian deadlock and a temporary measure. What is needed is a re-invigoration of nuclear technologies, abolition of mass private transport and re-instation of energy-effective public transport systems, especially RTS like Metro.

And I certainly think that exporting grain when your population is in a food crisis is extreme callousness, which is happening now. Far more extreme than just using money for some vainglorious building, actually, since that money could have saved people already in hunger, but didn't. A price hike in foodstoffs actually sends new people into the hunger abyss and maintains those already there on the bottom. Thus it's definetely more vile than usual excess spending, since it's a non-neutral action.

[salm]

Doesn´t the west actually burn their overproduction to keep the prices stable and to justify the massive subventions for farmers?

[Kanastrous]

Doesn´t the west actually burn their overproduction to keep the prices stable and to justify the massive subventions for farmers?

Deliberate burning to stabilize prices has the sound of agit-prop.

But there is definitely horrendous and morally indefensible waste built into the system.

[The Duchess of Zeon]

Doesn´t the west actually burn their overproduction to keep the prices stable and to justify the massive subventions for farmers?

In the United States, generally speaking, what is instead done is that farmers are paid to not grow crops.

[Kanastrous]

Nice rendition of the tughra, by the way, Duchess.

[/end micro-threadjack]

[Sea Skimmer]

At least in the US, I don’t know about Europe, many ethanol plants are now shutting down. Production of cars that can burn E85 hasn’t kept pace with the construction of new plants, and ethanol is a bitch to transport any distance because it absorbs water very easily. That means if a plant doesn’t have a good critical mass of E85 consumption within trucking distance, its not economical to operate. It doesn’t matter what the nationwide or global fuel market looks like, because you can’t move ethanol in barges, ships or pipelines, only much less economical trucks or railcars.

What’s more, E85 gives you about 20-25% less mileage per gallon and yet is sold for the same price as pure gasoline, so any consumer filling up with flex fuel is getting screwed over to begin with. Many owners of E85 vehicles have now figured that out, and don’t buy E85 anymore.

Doesn´t the west actually burn their overproduction to keep the prices stable and to justify the massive subventions for farmers?

The US just pays farmers not to grow stuff. Mind you this is NOT unique to the US or even to the west, in freaking India; a nation which records starvation deaths all the time, rice is routinely thrown into the ocean to control prices.

[Macunaima]

It doesn’t matter what the nationwide or global fuel market looks like, because you can’t move ethanol in barges, ships or pipelines, only much less economical trucks or railcars.

Strange, around here Petrobras has lots of pipelines for ethanol distribution. The impossibility to move ethanol in pipelines is due to some particularity of ethanol made with corn?

[Kanastrous]

The problem in the US is that the Feds are using the ethanol programs as yet another method to put tax subsidy money into the farmers' and agrobusinesses' pockets. It's not about really getting ethanol fuel into a position to supplant fossil fuels; it never has been. Look at the money invested in growing-and-distilling, versus the money invested in distribution and sales to the public, and that becomes very obvious.

Macunaima - You can't use petroleum pipelines to move ethanol for a number of engineering reasons, plus in the US the bulk of the pipeline network is in the south, built to serve petroleum distribution, rather than in the midwest where it's needed to service ethanol distribution.

Brazil is presently benefitting from some smart - at least, they look smart, to me - investment and infrastructure decisions made by your leadership in the 1970s and onwards.

[Siege]

There's currently a debate going on in parliament around here (The Netherlands) concerning bio-fuels and whether they should be supported or not. Interestingly enough, Greenpeace seems to have reservations against the idea, although it's not because people are starving in Central Asia but because biofuels are distilled from crops grown on land that used to be forest (or so they claim.)

Anyway, although biofuel and the whole idea of distilling it from grain when there are people suffering from hunger in other parts of the world never struck me as particularly wise policy, I didn't realize before they'd be suffering from hunger in the exactly same parts of the world that grow the damned grain in the first place. That does put another nail in the coffin of biofuels as far as I can tell, and if anyone could put forth some more links on the matter I'll be happy to forward them to the representatives of the party I support.

Not that I think doing so will help an awful lot, but 'try now we can only lose' and all that jazz.