By leaps and bounds: will Tatarstan bakers be given money to curb the price of bread?
Bakers of Tatarstan are asking to allocate about 300 million rubles of subsidies this year to continue the production of social bread varieties
Tatarstan producers of bread and bakery products are waiting. Since January 1 of this year, subsidies for the production of social varieties of bread have ended, which is sold at the lowest price — 40 rubles for a loaf of Selskiy and for a loaf of Nareznoy wheat bread. At the instruction of the rais of the Republic of Tatarstan, the bakers' proposal is being considered to increase subsidies to 5-6 rubles for every 1 kg of social goods sold, which will require the allocation of 300 million rubles. Without waiting for support, Kazan Bakery No. 3 JSC has raised selling prices since January 23, and Bakery and Confectionery Combine is still keeping them at last year's level (both are part of Ak Bars Holding).
Keeping the prices above 300?
After the abnormal rise in prices for chicken eggs, which has affected the entire food production chain, Tatarstan bread producers howled. Although the egg is not a basic ingredient for them, the “psychosis” about the growing non-resource costs (transport, spare parts, loans) forced them to ask for support. The republican baking programme for social bread varieties has come under attack, which involves almost all baking enterprises of the republic with an industrial baking cycle. After the end of the annual subsidy regime on January 1, they appealed to the government of the Republic of Tatarstan with a proposal to extend its validity, representatives of the bakery industry told Realnoe Vremya. But this time, manufacturers are asking to raise the amount of subsidies from last year's 4.5 rubles to 5-6 rubles for each kilogramme of social benefits sold. According to preliminary estimates, it will be necessary to allocate about 300 million rubles from the republican budget for these purposes.
Bakers' appetites are hardly excessive. Without government support, the profitability of production remains within 3%, Minister of Agriculture and Food of the Republic of Tatarstan Marat Zyabbarov said recently at a board meeting. “If cheap bread needs to be kept on store shelves, then subsidies will have to be provided to a level close to profitability," representatives of regional bakeries believe. According to them, grain and flour prices remain stable, but transportation costs, purchase and repair of equipment, and loan servicing are becoming more expensive. “In these conditions, the cost of social bread cannot remain the same," bakers explain. Besides, the amount of the subsidy has not changed for almost 3 years: compensation of 4.5 rubles has been valid since 2020, one of the enterprises of the Republic of Tatarstan emphasised.
BKK: “We do not plan to raise prices for Selskiy bread”
“The amount of the subsidy for this year has not yet been established," Bulat Kutdusov, the director general of the Bakery and Confectionery Plant (BKK), confirmed to Realnoe Vremya. “Subsidies for social bread are always received a month or two late. In the meantime, only January has just ended," he smiled. According to him, the economic assessment of the need to revise subsidies is carried out by the Center For Economic And Social Research, and the final decision will depend on their position.
Meanwhile, BKK continues to produce social bread, maintaining last year's prices: “We do not plan to raise prices for social bread varieties, this is not even discussed. For commercial types of products, it will depend on market conditions. But at the moment, prices for raw materials are stable," he said, making it clear that no increase is planned. Besides, the last time bread prices were raised by 10% in November-December, so consumers did not have time to get used to it. However, official statistics show that the prices of bread in Tatarstan have not changed. According to Tatarstan Statistics, the cost of rye bread is 58.17 rubles per 1 kg, and wheat bread is 76 rubles per 1 kg.
Let us remind that the mechanism of subsidiszing social bread varieties has been operating in Tatarstan since the beginning of the 2000s and is aimed at curbing retail prices for bread. Under the terms of the agreement with the Ministry of Agriculture and Food of the Republic of Tatarstan, enterprises are obliged to keep prices low while receiving subsidies. Social bread varieties include a loaf of Selskiy weighing 650 grams, a loaf of Nareznoy wheat flour bread weighing 400 grams and the Darnitsky bread. The recommended selling price for them is 40 rubles.
They don't save on bread
According to the Ministry of Agriculture and Food of the Republic of Tatarstan, over 20 enterprises from different cities of Tatarstan participated in the programme of production of social bread last year. They produced and sold over 50 thousand tonnes, while the annual volume of bread consumption in the Republic of Tatarstan amounted to about 380 thousand tonnes. They were compensated for expenses in the amount of 208 million rubles. By the way, this is by 62.5% more than, for example, in the Moscow region (128 million rubles).
Among the major producers of social bread — Bakery and Confectionery Plant JSC, Kazan Bakery No. 3 (both are part of Ak Bars Holding), Zelenodolsk Bakery, Chelny-Bread.
In a conversation with Realnoe Vremya, these companies confirmed their interest in receiving subsidies, but did not specify the expected output volumes in 2024. Each of them chooses their own “limit”: someone manages to sell a tonne per year, and someone — five times more, respectively, and the amount of state support turns out to be different. For example, Kazan Bakery No. 3 allocates almost 50% of its production to the “social sector”, and BKK — 37%. The head of the BKK assures that subsidies cover 30% of the loss from its production. And it turns out that cheap social services are paid for daily by ordinary customers. Maybe we should give up? After all, the poor do not always buy it.
Do we really need more cheap bread?
“The issue of increasing subsidies to 6 rubles is currently being considered, but this is not yet certain," Timur Arslanov, the head of the Food Market Development Department of the Ministry of Agriculture of the Republic of Tatarstan, told Realnoe Vremya. “The rais has been instructed to conduct a full analysis of bakery enterprises for the need for additional support. If the Economic And Social Research Center comes to this conclusion after the analysis, then, most likely, there will be an increase from 4.5 to 5, maybe up to 6 rubles. It's not exactly clear yet.” The first information is expected to appear at the end of February.
Do the authorities intend to increase the output of social bread? “Currently, an economic analysis of enterprises producing social bread varieties is being carried out. Depending on the results, tasks for the further development of their activities can be formed. Everything depends on a variety of factors affecting the financial stability of the enterprise," the Centre explained. Meanwhile, the Ministry of Agriculture and Food emphasises that it's not about covering 100% of the manufacturer's costs: “This is just support. Because they have commercial bread that generates income. These sources cover the costs of social bread. We understand that its baking is unprofitable, but still the state is trying to support it," Timur Arslanov explained.
Raise by 5%
Meanwhile, Kazan Bakery No. 3 JSC has raised selling prices since January 23. Since that moment, the cost of the Selskiy bread has been increased to 42 rubles, according to one of the manufacturer's branded stores. The promotion occurred after the appointment of the general director of the plant — on January 17, Timur Kafarov, who worked in the status of acting director, took the office.
By the way, in January, the head of the Association Bread of the Republic of Tatarstan was replaced. Marina Filippova, CEO of Interfood PLC, took over from Ildar Nikiforov. It was not possible to contact her. The receptionist said that she appears once a week.
The 5% price increase did not scare off buyers, sellers assure. Other varieties are even more expensive. “We sell six trays of Selskiy a day, or almost 100 kilogrammes. Demand is not falling," the sellers say. In the stores of the BKK chain, its cost remains the same — 40 rubles. It is difficult to find social bread varieties in the shops of Zelenodolsk. According to experts, a moderate rise in the price of bread is expected this year, i.e. within the limits of inflation.
Inara Khalmeeva, the editor-in-chief of the National Agrarian Agency:
“Are there similar measures to support bakers in other regions?"
“Federal subsidies are not provided for bakers this year. Therefore, each region decides for itself how and how it can help bread producers. For example, in Moscow, the land tax has been reduced for bakers, there are electricity benefits, as well as other state support measures. One day, the director of one of the bakeries in the Central Federal District admitted to me: “Everyone is asking for subsidies, but if they gave me at least 1 ruble per kilogramme of bread, then I would be satisfied.”
Let me remind you that in November last year, the president of the Russian Union of Bakers, Alexey Lyalin, announced the need to increase the volume of state support for baking in the country and proposed to develop a programme for the development of the industry until 2035. After all, socially significant production should have a common course of development, and enterprises cannot live alone and on the principle of “every man for himself.” At some enterprises, the equipment has been working since Soviet times, and the purchase of new furnaces costs tens of millions of rubles. The economy of bakeries should take into account the work of bakers at night, holidays, which ensures an uninterrupted supply of bread. And there is also a problem with personnel in the industry now.
Besides, the car fleet for bread delivery needs to be updated. It is necessary to take into account the fact that in many regions enterprises deliver bread to villages in any weather for several hundred kilometers, and often on disgusting roads. Other categories bring income, but here manufacturers have another problem — competition for a buyer and shelf space in retail chains.
“Should we expect an increase in bread prices in the middle of this year?"
“Who decided that bread should not get more expensive? For some reason, the rise in price of other products does not cause such a violent reaction among the population as the rise in bread prices. This does not mean that any price increase (recall eggs at the end of last year) can be considered justified. But if the growth is within 10% per year, then I consider such an increase acceptable. Look for yourself: all the components of bread production, in the broadest sense of the word, are becoming more expensive. One often hears this opinion that the record for grain harvesting in Russia should not lead to an increase in bread prices. But there is a very long way from spikelets in the field to the finished product, and the top expensive components of production are not flour, but fuel, logistics, equipment, salaries of workers, which also need to be increased. And don't forget about the retail chains that have to make their margin on bread.”