02 February 2004 12:45
Russian government acts to stave off higher bread, grain prices
Moscow, 2 February: Russian President Vladimir Putin today opened a gathering of ministers by recalling a meeting
with veterans last week. "Although the main thing we discussed was pensions, other issues not on the agenda cropped
up and the most controversial one was rising bread prices," he said.
Putin expressed displeasure at the government's failure to control bread prices. "You need to react rapidly
to events on the grain market," he stressed to ministers. "Do you know how much prices have gone up in some
regions? They've doubled," he said.
[Agriculture Minister] Aleksey Gordeyev reported to the president that Russia halted grain exports on 15 January and
would intervene on the markets to buy up 1.6m tonnes. This would begin to be sold off in mid-February.
"The government decided on Friday [30 January] to buy 1.6m tonnes" which "we will begin to sell off in
mid-February", Gordeyev said. The state will sell the grain to flour and milling businesses via exchanges, he
added. "It will go first to those regions that have shortages.".
"The prices will be 25 per cent below the market rate," he believed, which will make them
"gentle". On the whole, he said, "[state] intervention on the grain market could liven it up and bring
grain prices down by 10 per cent".
Russian exports of wheat and rye were virtually stopped on 15 January, Gordeyev said. He explained that this was
because bread grain prices in Ukraine are 25-30 per cent higher and in Europe 20 per cent higher than in Russia, which
had tempted businesses to sell grain abroad.
It is hard to see an economic reason for the rise in bread prices, according to Gordeyev. "Our checks have shown
that it is difficult to spot a trend here," he reported to the president. "Grain makes up 25-26 per cent of
the price of a loaf of bread." Apart from that, in St Petersburg "bread costs 40 per cent more than in Moscow
and two and a half times more than in Kemerovo [eastern Siberia], where they don't grow grain."
"It is hard to explain this in economic terms," Gordeyev pointed out. "The average trade mark-up on a
loaf of rye bread is over 30 per cent and on a white loaf over 40 per cent," he added. "That is very
high."
"We have to act and tell regions to deal with these issues," Gordeyev said. The Agriculture Ministry
"has examined events in the regions and established that in those where governors have acted promptly the situation
is fully under control". [Passage omitted]
Another way of regulating the price of bread is "removal of all regional barriers", Gordeyev said. "We
should take full control of price rises for bakery products, which should not be higher than the rate of inflation set
out in the budget."
Taking part in the meeting with the president were Deputy Prime Ministers Aleksey Kudrin, Viktor Khristenko, Galina
Karelova, Aleksey Gordeyev and Boris Aleshin, and Defence Minister Sergey Ivanov, Security Council Secretary Vladimir
Rushaylo, Acting Interior Minister Rashid Nurgaliyev, Economic Development and Trade Minister German Gref, First Deputy
Head of the Kremlin Administration Dmitriy Kozak, and presidential economic adviser Andrey Illarionov.
[ITAR-TASS news agency] |
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