Russian egg farms suffer from conflict with retailers

The Russian Union of Poultry Breeders Rosptitsesoyuz filed a complaint with the Federal Antimonopoly Service, alleging that the country's largest retailers are forcing farmers to sell eggs at prices below cost.

As Galina Bobyleva, General DIRECTOR of the Russian Poultry Union, explained, the largest retailers refuse to buy eggs more than 35 rubles ($0.58 ) for a pack of 10, sometimes even trying to bring the price down to 30 rubles ($0.50), which is well below average. production costs.

Price controls take the blame The

problems are thought to stem from the anti-hoarding and price control measures taken by the Russian government in early March amid a slew of punitive economic sanctions from the West. The government has established that large retail chains can restrict the sale of a number of "socially important goods" such as basic foodstuffs and limit markups.

With the new measures, the authorities planned to fight food inflation, a serious problem for low-income Russians, which, according to Rosstat, reached 19.5% in April on an annualized basis.

Retailers put pressure on farmers

However, poultry farmers argue that the price of eggs on the shelves should be reduced due to the mark-up of retailers. Currently, a pack of 10 eggs costs between 70 and 80 rubles ($1.16-$1.33) in the average Russian supermarket, Bobyleva calculated. Rosstat estimates it at 88.9 rubles ($1.48) per pack.

“They are trying to force us to sell [eggs at a price] below cost, and this is a crime,” Bobyleva said. “Eggs should not be cheaper than potatoes. We will not cut production, because eggs are an important, socially significant product, an exceptional source of protein. We must not forget that poultry farms provide jobs.”

The "root of evil"

Bobyleva said that the "root of evil" is in the division of the grocery retail market between several large players who can negotiate with suppliers from a position of strength.

“Small convenience stores, as well as large individual grocery stores and small chains, have been driven out of the market by monsters,” Bobyleva said, adding that suppliers cannot refuse the deal because eggs have a short shelf life and farmers often have no choice , except to conclude a contract on unprofitable terms in order to simply get rid of the products. For the same reasons, there is no time for lengthy negotiations.

On the other hand, production costs are rising due to a variety of factors - feed, packaging and logistics are becoming more expensive, Bobyleva added.