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WTO Fails to Benefit Russian Consumers

Published: August 2, 2013 (Issue # 1771)



  • Cheaper imported products are allowing retail chains to increase their margins, while local producers suffer.
    Photo: Sergei Porter / Vedomosti

Russians were promised lower prices when the country joined the World Trade Organization, but one year on prices continue to rise — at least for consumers.

Increased competition from WTO members is lowering wholesale prices and putting huge pressure on domestic producers, but consumers continue to pay the same or more for their products because of the monopolies held by retailers in their market segments. These were the conclusions of the annual monitoring report that the Public Chamber, an elected citizen group that aims to influence state policies, presented Thursday.

"One of the motives for the WTO accession was to lower prices for consumers. There has been no such effect," said Mikhail Popov, head of the Public Chamber's agriculture working group. "There is one single reason for this: Retail competition is insufficient."

Prices on food products, medicine, car maintenance and utility services have jumped 43 percent since May 2010, according to the report. Bread prices have increased by 20 percent over the last year; dairy products by 12 percent and potatoes by 55 percent.

The general trend is that when wholesale prices increase, so do retail prices, but when wholesale prices fall, retail prices stay the same or continue to increase, the report shows.

While consumers feel no benefits from increased competition, WTO membership is throwing down the gauntlet to Russian producers.

For example, the wholesale pork prices fell by 26 percent over the last year, yet retail prices only fell 6 percent. Meanwhile, increasing WTO imports will cost pork suppliers up to 40 billion rubles ($1.2 billion) each year, according to the Public Chamber.

Milk producers have also been hit. Imports of dairy products rose by 20 percent last year to about 9 million tons, equivalent to a 30-billion ruble loss for Russian producers, largely as a result of the WTO accession.

"[Local dairy producers] are not competitive in the Customs Union and especially in the WTO," said Andrei Danilenko, chairman of the National Union of Dairy Producers. "This year alone, we have lost so great a volume in milk production that we will fall back to 2005 levels by 2014."

Danilenko predicted that consumers will pay 10 percent extra for dairy products by the end of this year. Not wishing to scare consumers with higher prices, more producers will opt to supplement their dairy products with cheaper milk substitutes, such as palm oil, he added.

Ten to 30 percent of dairy products currently on the shelves are already doctored in this way.

The mismatch between wholesale and retail price movement is also evident in the grain sector. Prices fell from 11,500 rubles per ton in February to 6,500 rubles per ton at the end of July, yet bread prices continue to rise, said Arkady Zlochevsky, president of the Russian Grain Union.





 


ALL ABOUT TOWN

Wednesday, Sept. 17


AmCham’s Investment and Legal Committee Meeting convenes this morning in their office in the New St. Isaac Office Center at 9 a.m.


Learn more about the science of teaching English at today’s EFL Seminar hosted by the British Book Center. Revolving around the topic of learning styles, the workshop will help attendees better understand the different effective learning methods that can be implemented to learn English more effectively.



Thursday, Sept. 18


Get your nerd on at Boomfest, St. Petersburg’s answer to the United States’ popular ComicCon. Starting today, this international festival of comics will take over venues throughout the city center and includes exhibitions of comics and illustrations, film screenings, competitions and the chance to meet the genre’s authors, artists and experts.



Friday, Sept. 19


SPIBA’s newest addition to their Cultural Discoveries events is “Handmade in Germany,” an exhibition featuring unique handmade objects of a significantly higher quality than mass-produced items. The work of over 100 German manufacturers will be displayed during the event, which opens today in the Lutheran Church of Saint Peter and Paul on Nevsky Prospekt and runs through Sept. 28.



Saturday, Sept. 20


Starting on Sept. 18 and ending tomorrow is the Extreme Fantasy Wakeboarding Festival in Sunpark by Sredny Suzdalskoye lake in the Ozerki region of the city.


Those after something more laid back can instead head to Jazz and Wine night at TerraVino with legendary jazz guitarist Ildar Kazahanov. 12/14 Admiralteyskaya Emb.



Sunday, Sept. 21


Learn more about African culture and get some exercise during today’s “Djembe and Vuvuzela,” a bike ride starting in Palace Square that includes several stops where riders can listen to the music of Africa or watch short films about the continent. The riders plan to set off at 4 p.m. and all you need to join is a set of wheels.



Monday, Sept. 22


Do you love puppetry? If so, then be sure to go to BTK-Fest, a five-day festival that starts on Sept. 19 celebrating the art. Contemporaries from France, Belgium, the U.K. and other countries will join Russian artists to put on theatrical performances involving a variety of themes, materials and eras. Workshops and meetings are also scheduled for a chance to discuss the artistic medium in further depth.



Tuesday, Sept. 23


Marina Suhih, Director of the External Communications Department at Rostelecom North-West, and Yana Donskaya, HR Director for Northern Capital Gateway are just some of the confirmed participants of today’s round table discussion on “Interaction with Trade Unions” being hosted by SPIBA. Confirm your attendance with SPIBA by Sept. 22.


Kino Expo 2014, an international film industry convention, will be at LenExpo from today until Sept. 26. The third largest exhibition of film equipment in the world, the expo focuses on not only Russia but former Soviet republics as well.



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