They want to freeze prices for the "borscht set": a cost corridor will be developed for suppliers

The government is preparing a price freeze on a number of socially important food products, including for the borscht set. It will be implemented by concluding direct long-term contracts between suppliers and retail chains.

Let us recall that less than a week ago this initiative was put forward by the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF). It suggested that the authorities should not be complacent about the fact that annual inflation has begun to decline. Since all these are temporary seasonal factors. And in order to combat price increases, they should be frozen for a number of socially significant goods.

The idea did not find wide support among most market analysts. They pointed out that this was not the first attempt to fight prices using administrative methods. All previous ones ended the same way – with their growth.

However, the CMACS initiative, judging by everything, has found followers in the government and is already taking shape. The Ministry of Agriculture, the Ministry of Industry and Trade, and the Federal Antimonopoly Service (FAS) are actively working on price fixing.

The idea is based on several points. The list of products will be determined by the government. This is not about mechanically fixing prices on the counter, but about a certain "corridor" of selling prices for suppliers. Formula pricing should take into account the interests of both producers (farmers) and retail chains. The FAS, together with the Ministry of Industry and Trade, will monitor fixed prices at the time of concluding the contract, and then check their implementation.

Finally, trade and marketplaces are required to purchase at least 80% of product volumes within the range of selling prices under long-term contracts. And the remaining 20% - at their own discretion, including as a result of tenders.

Needless to say, the FAS is all for such a mechanism. According to the agency, this will smooth out seasonal fluctuations in food prices and eliminate sharp jumps. Farmers' associations also do not object to concluding long-term agreements for 3-5 years. But they believe that a separate structure is needed that would monitor the formation of prices in terms of production costs and profitability.

Some doubts creep into the position of the Association of Retail Companies. After all, if the price turns out to be wrong when concluding a long-term contract (for 3-5 years), then the main market participants - suppliers and trade - find themselves in a disadvantageous position.

Food producers are not thrilled with the latest campaign to fight prices. "Look at the cost of building materials, they do whatever they want, no regulation. And here we are fighting for every penny," indignant farmers write on social media.

At the same time, they are confident that with a “price corridor” (maximum and minimum values), trade will buy from them at the minimum permitted values, and sell at the maximum.

Chairman of the Board of the Association of Market Retail Experts Andrey Karpov assures that retail chains will, of course, meet the government halfway in terms of price reduction and self-limitation. But he himself does not yet know what decisions will be made, because, according to him, retail already maintains a minimum trade markup on social products.

- When suppliers sold us eggs for 200 rubles per dozen, they cost 150 rubles on the shelf for customers, - he says. - We compensated for the costs by increasing the prices of other goods, including those in the premium segment, this is permitted by law. But today, a number of public figures accuse us of collusion due to the increase in the price of grocery bags that customers take at the checkout. They cost, I think, 9 rubles, and we are reproached for the fact that the margin is 200 or 300 percent - that's 9 rubles! And what other goods can we use to compensate for our losses from minimal trade markups?

Despite the willingness of retail chains to “accommodate the government,” the interviewee does not know how the proposed long-term contracts can balance prices on the consumer market.

- Now some brands of eggs in retail cost 30-35 rubles per dozen, - he says. - The price has dropped from 150 rubles. The reduction in price occurred due to a sharp increase in supply, overproduction of products. We are already being offered to fix this price. But who knows what problems will arise in the industry in the future?

- The price freeze initiative is an extreme measure of social support due to the sharp rise in prices for basic products, - says Svetlana Ilyashenko, associate professor of the basic department of trade policy at the Plekhanov Russian University of Economics. - Its main strength is in the immediate but temporary containment of inflation and the protection of vulnerable citizens. If we look at the history of the issue of combating price increases, it becomes clear that such measures carry significant macroeconomic and microeconomic risks: shortages, declining quality, reduced supply, distortion of market mechanisms and increased pressure on business.

The expert believes that the success of the current government initiative will critically depend on the details of its implementation (mechanisms for compensating producers and retailers, quality control, combating shortages and speculation) and the duration of its action. A long freeze (say, until the end of 2026) significantly increases the likelihood of negative consequences. If fixed prices are lower than the cost of production or the market value of raw materials and logistics, producers and retailers may reduce supplies or remove goods from the range, which will lead to a reduction in the supply of goods, warns Ilyashenko. In addition, according to her, ensuring compliance with the "freeze" throughout the country for a wide range of goods requires significant efforts from regulatory authorities.