In Belarus Food Prices rise much faster than in the EU

Despite the serious rise in food prices in 2007, the Ministry of Agriculture and Food proposes to increase prices of staple crops by about 50%. This was decided at a recent meeting of the National Council for Labour and Social Affairs and announced by the Deputy Minister of Economy, Andrei Tur, writes the "National Economic Newspaper".

"You see what kind of situation this is for food markets, and we will face a dilemma: either we have empty shelves, or we fill them, but with higher prices," - said A. Tur. He also said that the Ministry of Agriculture and Food has proposed substantial increases in both wholesale and retail prices on four previous occasions, but the Ministry of Economy took the view that in the short term it would only be possible to raise prices by 5-6%. This, in the opinion of the Deputy Minister, will constrain inflationary pressures while maintaining a minimum level of profitability for the agricultural organisations.

As the main argument for higher prices in the domestic market is expensive food on world markets. According to some experts, this price imbalance may cause export of food products to neighbouring countries, particularly Russia.

One can understand the desire of some officials to increase prices and thus increase the profitability of agricultural production, however, stories about the rampant growth of prices, especially when discussing the situation in the EU, are greatly exaggerated.

For our western neighbours, some food products, as well as raw materials for food production are cheaper than in Belarus. This is the case despite the fact that the open market economy of these countries makes them more susceptible to fluctuations in world prices.

Here are some figures: According to the Statistical Yearbook of the Republic of Poland (annual statistical compendium of Poland), in 2006 the average price of pigs by live weight amounted to 3.56 zlotys per kg, which in terms of the Belarusian currency is about 2,500 BYR. In contrast, a Regulation of the Council of Ministers of 16.08.2006, № 1047 stipulates procurement prices for state requirements for live pigs per kg weight of 3,300 BYR in the first category and 3,100 BYR in the sixth category.

One and a half years later the price of meat in Poland remains below that in Belarus.

According to one meat-processing enterprise, Polish meat is now, on average, 38% cheaper than Belarusian meat. This is so despite the fact that the price of raw materials in Poland is the same as in Germany, and all of this takes place against the backdrop of a strongly appreciating euro!

It must also be noted that the consumer price index for food products in Belarus in January 2008, relative to January 2007 amounted to 117.6%. In Poland, for example, the corresponding figure is 108.1% (Central Office of Statistics, Poland).

Over the 12 months from January 2007 meat and poultry prices in Belarus rose by 14.9%. In Poland, over the same period, meat rose in price by 5.9% (5.6% in the case of pork) and poultry by 10.2 %. Belarusian prices for milk and dairy products increased by 28% while for our western neighbours milk rose by 17% whilst yoghurts, sour cream, dairy desserts and other dairy products rose by 9%. Our price for butter increased by 28% and vegetable oil by 73%, whereas for them the increase for both groups taken together was only 15%.

The rate of growth in consumer prices for food products in Belarus has continued to advance and in January 2008, relative to December 2007 the index was 101.3%, against an EU average of 101% (data from Eurostat - the EU Statistical Office). Closer to home, our food went up by 3.3% whilst in Poland the increase was only 1.7% in the first quarter of the year.

Some officials attribute the situation regarding food prices in Europe to high levels of subsidies to farmers, however, as noted at the February meeting of the Republican Association of Manufacturers (BelAPP) by the First Vice Premier Vladimir Semashko, in developed countries subsidies to agriculture amount to 17-25% whereas in Belarus this  figure approaches 60%.

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