Prices Hinge on Arbitrariness of Trade Monopolies, Says Expert

Prices Hinge on Arbitrariness of Trade Monopolies, Says Expert


Chicken meat is known to be particularly popular with the Russians. This fact is easy to explain as its prices are more or less affordable, especially in comparison with beef or pork. In addition, it is chicken that is the cheapest source of animal protein.

At the end of last year, the Russian President drew attention to the situation with the rising prices of basic foodstuffs. However, in February of this year, new circumstances came into the picture. Since Russia was not producing enough hatching eggs, the prices of similar imported eggs were doubled, and this in turn resulted in higher prices of poultry. Plus, the COVID-19 pandemic played its role in this situation, too.

It should be recalled that hatching eggs are not for sale. Chicks are hatched from them. They are then fattened in six months. After they gain appropriate weight, they are sent for slaughter.

Among other things, avian influenza was found on a poultry farm in the Southern Federal District. As a result, several workers were infected. In the end, everything worked out well enough. People got over the disease in a mild form, have already recovered and have not infected anyone. However, the chickens from that poultry farm, unfortunately, had to be sent for disposal. Consequently, the products of poultry farms became still fewer on the counters of many of shops in Russia, and the Russian government is going to consider raising customs duties for imported hatching eggs.

"Currently, there is a certain imbalance of supply and demand in the Russian market,” says the Ministry of Agriculture. “This is due, on the one hand, to the increased consumption of poultry meat and eggs as the most accessible sources of animal protein, and on the other hand, to some reduction of the output amid a worsening epizootic situation."

As this situation required an immediate response, members of the National Poultry Union including Cherkizovo, Prodo, and GAP Resource, as well as the Association of Retail Companies such as the retail chains X5 Retail Group, Magnit, Auchan, Metro and others agreed to fix wholesale prices for broiler chicken for three weeks. Thus, supply volumes will be not less than the level of the previous year.

At the same time, at a meeting with the National Union of Poultry Breeders retail chain executives said that demand for broiler chick has gone up 10-20% year-on-year. Poultry meat production fell 6.4% year-on-year in January due to higher import-dependent input costs, including hatching eggs, disruption of breeding supplies from European countries, as well as outbreaks of bird flu and other reasons.

“Well, how can chicken meat not become more expensive in our country if everything else gets more expensive? It can't work this way," Mikhail Delyagin, the research director of the Institute of Globalization Problems, a member of the Russian Academy of Natural Sciences, and a doctor of economic sciences, told “We have to understand that today prices hinge on the total arbitrariness of trade monopolies. So, if everything is getting more expensive because of rising costs, then even if poultry farmers do not increase costs, and in fact they do, retail chains will still increase chicken prices simply because the prices on everything else are on the increase. As for the shortage of hatching eggs, we are buying them from Turkey. Now, we have to buy even more. Well, this situation is not favorable. If we do not fight the arbitrariness of the monopolies, the prices, with few exceptions, will keep growing, and the consumer will have to tighten their belts even further.”

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