To achieve this goal, grocery retail chains are recommended to switch to long-term direct contracts with suppliers.
First of all, we are talking about the purchase of the most important products: meat, milk, eggs, as well as vegetables «borsch set».
If the chains begin to conclude direct contracts for a long term, this can significantly reduce the final cost on store shelves, said Viktor Yevtukhov, deputy head of the Ministry of Industry and Trade.
One of the main problems that can be solved in this way is seasonal price fluctuations, reaching sometimes a significant amplitude.
For example, in the first half of this year, the price of chicken eggs was very high, and in the summer, producers had to sell them below cost.
“Under long-term contracts, the cost of eggs is more stable, and the volatility is lower for the year. As far as we know, during the year, the purchase prices for eggs for deliveries under long-term contracts can fluctuate around 20%, maintaining a positive sales profitability for producers. At the same time, when purchasing at tenders, prices during the season and off-season may differ by two or three times, «Viktor noted.
In his opinion, direct contracts would ultimately be beneficial to everyone: both chains and manufacturers, as they would insure against uncertainty.
In addition, such «swing» shakes the entire market, since the price of the same eggs, for example, affects the cost of baked goods and other products.
Today, the Ministry of Industry and Trade is even considering the possibility of legislating the obligation of both networks and manufacturers to interact exclusively through direct contracts.
What are the disadvantages of the direct contracting system?
With all the prospects for the introduction of such a tool, this proposal has caused a lot of criticism.
First, for many segments, direct contracts are already widely used. For example, poultry farms sell up to 80% of their production through them.
At the same time, direct contracts deprive the market of flexibility , since they force participants to make transactions, focusing on the market realities of a particular time, and they can change quickly. For this reason, it is highly unlikely that such contracts will be concluded for a long time. But the Ministry of Industry and Trade insists that it is necessary to contract immediately for six months or a year.
According to a number of experts, e-auctions are more fair, which can be conducted, for example, on a weekly basis.
They will allow you to see and assess the real situation on the market, prices will be regulated by themselves, without any external pressure and coercion, which is very important for all participants in transactions.
As noted by Viktor Yevtukhov, the Ministry of Industry and Trade is simultaneously considering a number of other measures aimed at the same result — lowering prices in stores.
Including:
Customs tariff instruments.
Direct manufacturer support.
Commodity intervention (for example, a sugar intervention fund is already being set up).
Support for small producers (organization of fairs, markets, non-stationary trade).
It is planned that all this together will help contain the rise in prices and, no less important, save the market from sharp price surges.
