One Solution: Import Substitution!

Audit Chamber Forecasts Meat, Milk, and Cheese Deficits
November 3, 2015
Lenta.Ru

The Audit Chamber argues that under the import substitution program, Russia may experience shortfalls of meat, dairy products, and cheese in 2016. This outcome is expected because raw produce from countries subject to the embargo are often used in food production, reports RIA Novosti.

“There is a risk of partial compensation of shortfalls of produce banned for import from a number of countries,” the Audit Chamber reported. It is likewise expected that in the medium term, problems with consumer demand might arise in the process of import substitution.

As the agency noted, after using high-quality products, shoppers refrain from [purchasing] “Russian counterparts with lower consumer characteristics.”

“Accordingly, support, ‘voting with rubles,’ should not be expected from consumer demand for domestic products in the event of their qualitative deterioration,” said the chamber.

It was reported on October 28 that ten suppliers of imported meat and dairy products, as well raw materials for confectioneries, had filed a complaint against supermarket chains with the industry’s good practices compliance commission. The reason for the complaint was the fact the chains had been fining the suppliers for stopping the supply of goods affected by Russian anti-sanctions.

On October 1, Russian agricultural watchdog Rosselkhoznadzor released findings that 78.3% of cheese in Russia is adulterated, since it contains vegetable oils. According to the agency, this figure is as high as 45% in Moscow and Moscow Region. The overall level of adulteration in the dairy market is 25.3%, as revealed by monitoring conducted from January to September of this year.

According to a study done by the Roskontrol Consumers Union, 75% of the cheese and 58% of the butter sold in major Moscow supermarket chains is adulterated.

In August 2014, Russia imposed a produce embargo on EU member states, as well as the US, Australia, Canada, and Norway. In late June 2015, Moscow extended the embargo for a year. Later, the Prime Minister of Russia Dmitry Medvedev signed a decree extending the produce embargo to countries supporting sanctions against Russia. The restrictions were extended to Albania, Montenegro, Iceland, and Lichtenstein. The list of banned produce includes, in particular, beef, pork, fish, and milk. If imported into Russia, these goods are subject to destruction.

On June 24, 2015, Russian President Vladimir extended the counter-sanctions for a year, until August 6, 2016.

orthodox import substitution — *“For my flesh is meat indeed, and my blood is drink indeed” (John 6:55). Full Russian Orthodox import substitution to the masses!*

Price of Cucumbers in Russia Soars by 1,000 Percent!
Elena Rotkevich
November 2, 2015
Gorod 812

According to Rosstat, the price of fresh cucumbers in late October rose by almost a third in a week. In Petersburg, the price of cucumbers has soared by 500–1000% over the [last] month. Gorod 812 tried to get to the bottom of what has happened with cucumbers and whether we are threatened by a deficit.

Shopkeepers cannot keep up with rewriting price tags. A month ago, dimpled cucumbers cost a little over 20 rubles a kilo, but now the average price is 150 rubles a kilo. In small stores and produce markets, the price has already surpassed 200 rubles a kilo. On the web, farm-grown long cucumbers are selling for 525 rubles a kilo. They are more expensive than meat.

What has happened with cucumbers? Gorod 812 talked to producers and suppliers.

The first thing we have discovered is that a deficit has set in. There is a shortfall of cucumbers in Petersburg.

“[We are selling] only greenhouse-grown cucumbers and only on order. We have a contract with a greenhouse in Leningrad Region. We supply their produce to supermarket chains. At the moment, we are really standing in line waiting for the harvest. We are even giving some of our clients the runaround,” a source at the company Veles told us.

“There are not enough cucumbers?”

“There is a total shortfall. The price for them now varies from 80 to 160 rubles a kilo. But that is today. The prices change practically daily. There are no spiny, dimpled cucumbers at all. Everyone is trying to grown medium-sized cucumbers, because it is unprofitable to grow short cucumbers: their mass is too small. There are loopholes for shipping cucumbers from abroad, of course, but it is very expensive anyway,” our source at Veles said.

Gorod 812 contacted local cucumber producers. On the website of the agricultural enterprise Victory (Annino Village, Leningrad Region), cucumbers were listed at 85 rubles a kilo. We gave them a call.

“The information online is outdated. We have run out of cucumbers. We only have ingredients for borscht: cabbages, carrots, beets, and potatoes. We had cucumbers in the summer, because we have summer greenhouses. We don’t have winter greenhouses,” a source at Victory told us.

The situation with the scarce product is also tense in the warm climes of our country.

“It’s already cold. Cucumbers aren’t growing,” we were told by a farm in Volgograd Region that only a couple weeks earlier had still been selling cucumbers.

It was the same thing in Krasnodar Region.

The Flagma agricultural enterprise in Krasnodar was reluctantly willing to part with their cucumbers.

“We have very few cucumbers now. A client came yesterday. He offered a good price, but we couldn’t find him the tonnage he needed. We even asked around the greenhouses. They all said they couldn’t give us cucumbers, because the entire harvest is bespoken a month in advance. If you don’t need much, we can sell them to you for 100 rubles a kilo. The cucumbers are local Ghermans, pendular cucumbers.”

At the Petersburg company Gold, which supplies cucumbers from Belarus, the price for a kilo of cucumbers rose from 110 rubles to 115 rubles in fifteen minutes.

“It was 110 rubles for the previous batch. But now it is 150 rubles a kilo. There is little supply on the market, and Belorussia [sic] is running out. Wholesalers are starting to ship from other places, like Turkey and Azerbaijan. Delivery is more expensive, and the price is higher,” our source at Gold explained.

The online price for imported cucumbers starts at 1.35 euros a kilo, plus delivery costs. The previous supply chain of cheap cucumbers from the EU has been blocked by the produce embargo. Businesses are trying to organize the delivery of cucumbers from China and Moldova. Petersburg is mainly supplied with Turkish cucumbers. Local cucumber producers advise checking them carefully for nitrates and other chemicals just in case.

By the way, relatively inexpensive cucumbers (starting at 1.69 euros a kilo, i.e., around 120 rubles a kilo) can be found in hypermarkets in [neigboring] Finland.

In Leningrad Region, Gorod 812 managed to find only one producer of fresh cucumbers, the agricultural holding Vyborzhets. It has a virtual monopoly on the local market. Vyborzhets sells its produce to everyone, wholesale and retail buyers, on the same terms, at the same price. Long and medium-sized cucumbers go for 140 rubles a kilo; short cucumbers, for 190 rubles a kilo.

“What did you expect? Our businesses have realized there is going to be a cucumber shortfall, and are now trying to recoup their costs from previous years. It is a predictable situation. On the other hand, we cannot blame them. Back in the day, they almost declared bankruptcy when cucumbers were imported to Russia and our economy was demolished,” said Alexander Bykov, president of the Leningrad Region and Petersburg Farmers Union.

According to Bykov, the cost of producing local cucumbers has remained unchanged.

“Maybe it has increased a bit, depending on energy costs. There is no competition in this market. The term ‘competition’ is applicable if two producers grow produce using the same technology. But if two products are produced in different conditions, the price will be different. The Antimonopoly Service cannot pin anything on them. They are free to do their own pricing. Plus, there is a chain of middlemen and retailers who ratchet up the prices. One could force chain stores to contract directly with producers, thus bypassing the layer of intermediaries. But dealers usually own the storage warehouses and take the risks involved in selling the produce. Producers do not have big warehouses. They have nowhere to put produce,” explained Bykov.

It seems that Russia is returning to Soviet times. Those who were alive then will remember there were no cucumbers in winter at all. They would run out in October, and the first long greenhouse cucumbers would hit the shelves for March 8 [International Women’s Day]. They cost 2 rubles and 20 kopecks a kilo, the same price as baloney, while meat (beef) cost 2 rubles a kilo. Then the cucumbers would disappear again until summer. During the dacha season, the price for cucumbers would fall, but it was no longer the tasteless “eighth of March” long cucumbers that were on sale, but normal cucumbers. In Leningrad, they cost around 20 kopecks a kilo. The current deficit is also an omen from Soviet times.

“I think the authorities should pay attention to the shortfall of cucumbers in Petersburg. And pay more attention to agriculture, because it is the industry that can replace oil in Russia,” said Alexander Bykov.

Translated by the Russian Reader. Second image, above, courtesy of paperdaemon

“We Are Going to Die of Hunger in October”

“We Are Going to Die of Hunger in October”: A Fruits and Vegetables Vendor on What Is Happening at Moscow’s Markets
Sasha Shevelyova and Asya Yemelyanova
August 12, 2015
The Village

A year ago, Russia imposed a ban on the import of produce in response to economic sanctions by the US, EU, Canada, Australia, and Norway. Meat and dairy products, fish, fruits, and vegetables from these countries were embargoed. As conceived by legislators, it was simultaneously supposed to deprive western producers of a significant market, and also to give an additional opportunity for domestic producers to develop.

The Village decided to find out whether the fruits and vegetables now sold in Moscow’s markets are really grown in Russia, and what market vendors think about the anti-sanctions and the destruction of contraband food. Unfortunately, the majority of vendors we asked for commentary refused to speak to the press, so we are publishing the monologue of a female vendor who asked not to be named.

Pyotr Konchalovsky, Peaches (1916)

I have been selling fruits and vegetables for seven years running. I sold baked goods before, and a girlfriend of mine who sold vegetables said to me, “You work sixteen hours a day. Why do you need that? Come work with us!” I worked in a pedestrian underpass, and the hours there were seven in the morning to eleven at night. Now they are eight in the morning to eight at night. The work here is also hard. Everything has to be sorted by hand and dragged around.

Our market has its own laboratory, and we submit produce for testing every three days. It is not cheap, a test costs from 300 to 800 rubles [approx. 4 to 11 euros, as of this writing], and we pay for it ourselves. If the tests come back negative, the produce itself and what was lying next to it are discarded.

On the Fad for Domestic Products
There is now a fad for everything domestic. There were good strawberries from Poland or Greece, but no one was buying them. But if you say they are Russian, they get bought up. But where in the heck does our produce come from? On the other hand, I have to make sales and make my wage, and so I have begun saying they are from Krasnodar or Crimea, and people buy them. They come back, saying, “Oh, they were so delicious!” and buy them again. You get asked, “Whose peaches are these?” and you say, “They’re Crimean.” But can you imagine how they would get here from Crimea? There is no way you could ship them here. They would spoil and get crushed. It is impossible to ship them.

No one knows where fruits and vegetables are imported from today. “Turkey” is printed on all the crates, but such large quantities do not grow in Turkey.

It works like this. You go to the warehouse, and a semi-trailer truck with, say, Belarusian plates is parked there. Crates from “forbidden” countries are removed from the truck and poured into others crates with no coding. Ultimately, they write, “Grown in Russia.” I really like it when they say it was grown in the Moscow Region. Are you serious? The entire Moscow Region is built up with the dachas of oligarchs, who is going to grow produce there, and where? Take Moscow’s near suburbs. Go there and see how much is being grown. You won’t find much of anything. Either you will find what gets sold in really expensive shops or what gets grown for reference, for show.

The onions, potatoes, carrots, and beets are mostly from China. We try and buy high-quality produce, and we press the wholesalers to tell us where things are from, but no one knows. You watch as cherries are poured into other boxes, and peaches are put into different crates.

The tomatoes are transferred to Russian boxes, and vendors say they are from Krasnodar, but I know I am eating a Ukrainian tomato. But I don’t know how it got here.

The tomatoes, say, have been grown in Ukraine. They were shipped to Belarus, transferred to a truck with Moscow plates, and driven further down the road.

We do not sell Polish apples. They were banned back in March. But then unmarked boxes started showing up, and no one would be able to prove they are Polish. Of course it is illegal. It is even worse in the grocery stores. They ship produce illegally directly from Belarus. Moscow has eaten Ukrainian produce its whole life, and then it suddenly became bad.

On the Destruction of Peaches
My personal opinion is that we are going to die of hunger in October, because, two weeks ago, I bought these tomatoes wholesale for 45 rubles [approx. 60 euro cents]. I am not lying. Now we bought the same tomatoes wholesale for 110 rubles [approx. 1.5 euros]. Previously, it would cost 10,000 dollars for a truck to clear customs. The truck would drive up, ten grand would be placed on the custom officers’ desk, and the truck would head on down the road. But we, the consumers, ate normally.

Now it is twenty-five grand just to clear customs. And the drivers said they have been quoted a price of 50,000 dollars just to fly through customs. But then they will be bringing fresh, high-quality, beautiful produce. Meaning, how much are they going to be selling it for? At sky-high prices, so the poor will just disappear. If they continue to let through trucks from “banned” countries, we will survive. If not, it is not clear what will happen.

We have children in the Kursk Region who have seen peaches only in pictures. How many truckloads of peaches have been destroyed now? Would it not have been simpler to distribute them to orphanages? Everything is buried in taxes. As they say, “Russia has allocated so much money.” Do you know the right way to say it? “We have the taxpayers’ money, which we can dispose of in this way.” Because this is our money, after all. It is we who are paying for everything.

On the Market
We pay vendors a wage for their services. For the tax inspectorate, we write 10,000 rubles a month [approx. 138 euros], the minimum wage, but she [sic] gets 1,500 rubles a day [approx. 20 euros]. She works for us on the books, but many people want to work off the books. No one here has believed in pensions for a long time. They are grateful for this wage, because no one can give them more. We are all people and treat each other like people. Holidays and weekends are granted on request. No one tries to kill anyone for anything; everything is negotiable. 1,500 rubles is the stable daily wage, but there are also bonuses and gifts for the New Year.

The ethnic dynasties are still relevant at the market. Everything has been divvied up long ago, things settled down way back in the 1990s. They have their pens there, but they are all in the other hall. (The market has two halls—Editor’s note.) They sort things out among themselves. And they sell their produce for twice as much, of course. The second hall is not our competition. Potatoes cost 80 rubles a kilo there [approx. 1.10 euros], while in our hall they cost 40 rubles. The customers there are loaded. The oligarchs send their drivers and housekeepers there, and they immediately pack them up with everything. That is how they live. We are focused on the middle class; we have a different audience. Now a food fair is opening here as well. We will have zero receipts.

Sometimes, the police organize raids. Half of them need to do these checks for show, half of them, for the money. But raids are unproductive at this market. Everyone has residence permits and vendor cards: market management monitors all that. In the past, it was more frightening at the open markets.

On Price Hikes
What will happen next is unclear; the prices are crazy. It would better for us to close the stall than to listen to what people are going to be saying to us. The prices are such that people simply don’t have the money to buy these things. Either you want it and you will buy it at an exorbitant price (provided you have the money) or there will be no way for you to buy it. But I always think about the elderly and children. How will they manage? A mother who has just given birth doesn’t go back to work. She has to stay home with the child for two or three years. Her husband, working alone, will not be able to manage to pay for all this. So what are they going to do? Steal? People are still surviving in Moscow, but it is terrible to think what is happening in the hinterlands, just scary.

A crate gets more expensive by an average of 100 rubles a day [approx. 1.40 euros], and there are five to six kilos of produce in a crate. For the time being, we are keeping our prices stable, more or less. But what will happen come winter? There are products like pumpkin, zucchini, broccoli, and cauliflower that a child needs to eat up to the age of one. But young families are poor, only the husband works. Prices are not falling, but the child still has to be fed. I pity them the most. And I feel sorry for the elderly, who have monthly pensions of 15,000 rubles [approx. 207 euros] and spend 13,000 rubles [approx. 180 euros] at the pharmacy.

This is how we do it. If people say they are buying produce to make compote, we give them the smaller, less expensive fruit. If they say they are making jam, we give them average-size fruit. If they are saying taking it to their daughter or someone in hospital, we give them more expensive fruit, but really good fruit. We do reorders every day, most fruits do not stay fresh longer than that. We sort everything by hand daily.

Translated by The Russian Reader. Image courtesy of WikiArt. Thanks to Comrade Nastya for the heads-up.