The Russian authorities continue to expand the practice of manual price control amid accelerating inflation, which reached a 5-year high and continues to accelerate, contrary to forecasts by the Central Bank and the Ministry of Economic Development.
Deputy Prime Minister of Russia Victoria Abramchenko instructed the Ministry of Economic Development and the Ministry of Agriculture to submit proposals to stabilize prices for mineral fertilizers, TASS reports with reference to the press service of Abramchenko’s office.
The goal is to stabilize prices, which increased by 10-40% last year, and this year they have added another 10-20%. In March, the head of the Ministry of Agriculture Dmitry Patrushev proposed freezing fertilizer prices by analogy with sugar and sunflower oil.
As a price point, Patrushev suggested using a formula where the fair price is equal to the average price level of 2019 plus the projected inflation rate for 2021.
Three months ago, fertilizer producers managed to fight off forced fixation with the help of the Ministry of Industry and Trade, which rejected the idea of ”strict regulation”.
However, in May, the department announced that “in the event of an explosive (or unreasonable) rise in prices, the government of the Russian Federation will take appropriate response measures.”
The Russian Fertilizer Producers Association (RAPU) explained that Russia uses the pricing methodology of the Federal Antimonopoly Service, and that companies are holding back prices amid sharp changes in the macroeconomic situation.
This makes it possible to achieve a difference between the export price and the price on the domestic market of 20-30%, which gives Russian exporters of agricultural products the opportunity to work effectively on the global food markets, the RAPU insisted.
The Association also emphasized that the prices for mineral fertilizers in the Russian Federation are still lower than in 2015, and, according to the consulting company EY, the cost of mineral fertilizers in the selling price of socially important food products does not exceed 1-2%.