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Retailers, producers promise to curb prices against backdrop of anti-Turkish sanctions

December 26, 2015, 3:51 UTC+3 MOSCOW

There is a risk of growth in the prices of vegetables and fruit, because the import of these items from Turkey will be prohibited as of January 1

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© Michael Pochuev/TASS

MOSCOW, December 26. /TASS/. Russia’s retailers and food manufacturers have promised to curb prices in the context of the ban on the import of some products from Turkey, the association of food producers and providers Rusprodsoyuz and the association of retail trade companies AKORT have told TASS.

"Over the last quarter of the outgoing year most of the union’s members refrained from raising the prices of their products even though foreign currency exchange rates and logistics costs kept rising. Consumer demand is declining. After the New Year holidays there will follow a traditional slump in demand, so higher prices will benefit neither manufacturers nor retailers," Rusprodsoyuz director for development, Dmitry Vostrikov said.

The head of AKORT’s presidium, Ilya Lomakin-Rumyantsev, agrees. He says that large retail chains are resorting to various promo actions in view of the falling traffic and consumers’ buying power. Alongside the forthcoming food embargo on Turkish products Lomakin-Rumyantsev mentioned a number of other factors for price hikes.

"As far as price growth factors are concerned, I can easily name four or five of them: geopolitics, shortage of cheap borrowings, shrinking variety of supply, unstable foreign deliveries, administrative pressures and excessive control," he said.

There is a risk of growth in the prices of vegetables and fruit, because the import of these items from Turkey will be prohibited as of January 1, Vostrikov said.

"Rusprodsoyuz affiliates are already in talks with alternative providers. Secondly, they have been taking steps to boost domestic production. Many of the union’s members have been making investment into gardens greenhouses and wholesale distribution centres," he said.

Warning from anti-monopoly service

Russia’s anti-monopoly service FAS warned food manufacturers and providers against any unreasonable price rise in the wake of the embargo on food import from Turkey. Vostrikov confirmed that that Rusprodsoyuz had received such a message and promised that the association was prepared to follow FAS recommendations.

AKORT has not received such a message yet, but the association invariably cooperates with the FAS and will be prepared to follow its instructions, Lomakin-Rumyantsev said. "As an association we may address the government with a request for taking measures to ensure such excessive control or other costs should not trigger price hikes. We are capable of offering our members better practices that can keep prices unchanged. And we can ask our partners in the inter-industrial expert council, to which manufacturers are affiliated to agree to keep price growth within reasonable limits. We can and will do that," Lomakin-Rumyantsev said.

Food embargo Turkish style

Russian President Vladimir Putin on November 28 signed a decree on measures to ensure Russia’s national security and protect Russian citizens from criminal and other illegal action and the use of special economic measures against Turkey. Among other things the decree banned or restricted the import of certain Turkish goods that government promptly identified.

Starting from January 1 Turkey will be unable to export to Russia such fruit as oranges, tangerines, grapes, apples, pears, pears, apricots, nectarines, plums, and strawberry. The vegetables on the sanction list are tomatoes, cucumbers, cauliflower, broccoli, and onions. The ban also applies to frozen chickens and turkeys, carnations and salt. Exceptions are made for items being brought to Russia for personal use in amounts allowed by the Eurasian Economic Union.

According to the Agriculture Ministry Russia in 2014 imported $1.7 billion worth of farm produce from Turkey (as much as in the previous year). Turkey accounted for 4% in Russia’s overall food import. In value terms Turkey’s main export items were fruit, vegetables and nuts. The Agriculture Ministry says the amount of farm produce import from Turkey in January-October 2015 totaled 1.035 billion, falling by 21.2% against the same period of 2014.

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