Easy Entry: RF Requests Tariff Relief on Imports of Fruit and Vegetable Products
Russia has proposed to the Eurasian Economic Commission (EEC) to grant the Russian Federation a tariff concession from January 1 to July 31, 2025 on imports of potatoes, onions, apples, cabbage and carrots. The initiative is aimed at curbing the growth of consumer prices for socially important products and preventing a shortage of goods in the domestic market. Izvestia" analyzed how the cost of goods changes and whether the list can be expanded.
Price changes
According to Rosstat data, the price increase relative to December 2023 for potatoes (+78%), cabbage (+31%), onions (+37%) was impressive, Albert Koroev, head of the department of stock market experts at BKS World Investments, told Izvestia. To a lesser extent, it affected carrots (+11%).
- As for the expansion of the list - it is difficult to estimate, I can only note also high dynamics of prices for beet (+28%), - he noted.
Cucumbers, which rose in price by 11.3% from November 12 to 18, retained the leadership in price growth among vegetable products, but the pace has slowed slightly, according to Rosstat data. In general, fruit and vegetable products from November 19 to 25 increased in price by 3.8% against 4.1% a week earlier.
Thus, prices for tomatoes increased by 5.8% (up 6% a week earlier), cabbage - by 3.7% (up 4.7%), onions - by 3.2% (up 4.4%), potatoes - 2.7% (up 3.8%), beets - by 2.3% (up 1.6%), bananas - by 1.4% (up 1.2%), apples - by 1.1% (up 1%), carrots - by 1% (up 1.3%). Since the beginning of the year, the leader in price growth is still potatoes, which rose in price 1.8 times.
The Ministry of Agriculture noted that the record potato harvest in 2023 led to a significant decline in prices for this product. At the same time, in 2024, potato production decreased due to unfavorable weather conditions, which, according to the Ministry of Agriculture, "pushes" prices up.
"At the same time, today potatoes from producers cost 22.4 rubles per kilogram, which is lower than, for example, for the same period in 2021," the Ministry of Agriculture reports.
Local deficits
Imports will replenish the market, reassure buyers, and increase the competition of sellers, says Natalia Shagaida, director of the Center for Agrifood Policy at the Institute of Applied Economic Research (IPEI) of the Russian Academy of National Economy and Public Administration.
- So the reduction of import barriers is a useful step. They will import based on the current prices. If there is competition between sellers, the price may be reduced. But it should be remembered that the price is formed for external suppliers taking into account the ruble exchange rate. In a situation when everything is changing, it is a thankless task to predict a decrease," the expert told Izvestia.
Russia's proposal to provide preferential tariffs for imported fruits and vegetables from EAEU countries is a proactive work, said Artem Deev, head of the analytical department of AMarkets.
- Only in January last year the cost of fruits and vegetables jumped by 16% at once, in different regions of the current year in winter there were also similar price hikes, - the expert explained to "Izvestia". - Before the New Year holidays, the natural seasonal price rise (greenhouse crops instead of summer ones) is superimposed on the excitement due to preparations for the New Year (so, in the last week of December, the cost of a kilogram of mushrooms almost doubles, sweet peppers - by dozens of percent).
Preferential import of fruit and vegetable products, in his opinion, will smooth out possible local shortages of goods and restrain the growth of prices. Partners from exporting countries, in turn, will get a guaranteed market throughout the year and will be able to invest in their development.
A certain amount of
Russia proposes the EEC to grant the Russian Federation a tariff concession from January 1 to July 31, 2025 on imports of potatoes, onions, apples, cabbage and carrots, according to the draft decision of the Commission's Council. The deadline for discussion of this proposal is December 18 this year. It is noted that the initiative is primarily aimed at curbing the growth of consumer prices for socially important products and preventing a shortage of goods in the domestic market.
The Ministry of Economic Development has previously reported that the main contribution to the dynamics of inflation is made by food products, primarily fruit and vegetables (the cause of rising prices were supply restrictions due to the May frosts), as well as dairy products.
The Council of the Eurasian Economic Commission (EEC) decided the day before to grant Russia a tariff concession in the form of duty-free import of a certain amount of goods. It is about the supply of potatoes in the amount of no more than 150 thousand tons, carrots - no more than 55 thousand tons, apples - no more than 230 thousand tons. The term of the privilege - from January 1 to July 31, 2025. In addition, Belarus has a quota for duty-free import of up to 5 thousand tons of carrots and up to 20 thousand tons of apples. These products are intended for sale in retail trade or further processing.
"Every year in the period of off-season in the market of fruit and vegetable products there are significant fluctuations in consumer prices, which is primarily due to the end of stocks of domestically produced goods. Taking into account the smaller harvest this year, the adopted measure will make it possible to provide additional supply in the domestic market and increase the availability of vegetables and apples for the population," EEC Trade Minister Andrei Slepnev said.
"Izvestia" sent inquiries to the Ministry of Economic Development and the Ministry of Agriculture, but at the time of publication no answers had been received.
Fighting inflation
There are tools to fight inflation without raising the key rate, but the Central Bank makes the decisions, Russian President Vladimir Putin said earlier.
"These are various tools of the Central Bank to regulate the banking sphere, related there to the mandatory resources that banks must have with them before they issue loans. Related to decisions, including those of the government, to increase lending to the population, on mortgages, on loans of a social nature and so on. There are many, many other instruments, but it is the Central Bank specialists who, in accordance with the current law of the Russian Federation, should make the final decisions," he said.
In order to ensure a reduction in inflation to the target of 4%, it is necessary to further tighten monetary policy and ensure a more restrained growth in demand, the Bank of Russia noted earlier.
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