Potatoes are rising in price again in Russia

2021-10-09

The market has things all squared away

Ibragim Ramazanov, Professor of the Industrial Chair of Trade Policy of the Plekhanov Russian University of Economics, said that another rise in the price of potatoes is expecting in Russia in November. The price rise was caused by a potato crop failure due to the drought this year, as well as a reduction of the potato-growing area, and an increase in the share of imported potatoes in the Russian food distribution market.

The decrease in land availability for planting potatoes is largely due to the export-oriented growth pattern of the whole crop farming industry to produce and sell cereals mostly. Grain crops are in great demand on the world market, so large agricultural companies are focused on grain growing. At the same time, it speaks for itself that the recent increase in crops production does not entail a drop in the price of bread and other grain products. This is also due to the export orientation of the Russian agriculture sector as a whole. Thus, in 2020, the cereal production amounted to about 85.9 million tons of wheat, and 38.5 million tons out of the entire output, i.e. 45% of the whole crop yield, were exported. It is therefore only natural that both bread and potatoes become more expensive under these conditions.

Agriculture production is done not in the way to meet food security of Russian people, but first of all for the large agricultural companies and agro-business dealers to make money.

There is also another crucial factor for growing agricultural products export besides greed for profit. A significant share of farming machinery in Russia is imported. So, in 2017-2018, Russian-made tractors for farming and forestry accounted for only about 32% of all tractors in the market, the rest are all foreign-made. It turns out to be necessary to make provision for the foreign exchange earned from crops exports out of the country to pay for the imported equipment needed.

The rising food prices have accordingly been driven not by the crop failures, but only by the current market economy built in Russia.