According to some experts, the current profitability of the flour milling business in Russia is less than 2%, which poses a significant problem for the industry.
A number of specialists believe that many flour milling companies are currently operating with profitability near zero.
At best, it reaches 1.5%, which is extremely low. However, for some companies, it can even be negative.
At the same time, Russian millers are fully fulfilling their responsibilities: they produce sufficient flour to satisfy the domestic Russian market.
Nevertheless, the negative profitability of this business is cause for concern. No business can operate for long while incurring losses instead of profits.
To prevent a decline in flour production in Russia in the foreseeable future, analysts believe the government must take measures now to improve the situation in the industry.
One of the challenges facing millers has been the implementation of the Federal State Information System «Grain.» The essence of this system is to track the journey of each grain batch «from the field to the end consumer.»
Despite all its advantages, flour mills have found themselves under additional pressure, as they are required to bear the costs of technical equipment, software, and operator salaries.
Therefore, we see additional costs that inevitably have to be factored into the price, experts note.
Furthermore, the «Honest Sign» label is scheduled to go into effect in November 2026, which will also apply to flour and pasta.
This means that companies will again have to spend significant resources to implement such a system. Preliminary estimates indicate that the total costs for companies could reach 150 billion rubles.
However, such investments will have no impact on the bottom line, meaning business margins will further decline.
Finally, flour prices have fallen by approximately 3% over the past year. This further hurts millers, as low prices prevent them from generating significant revenue from their operations.
Furthermore, many flour mills today use outdated equipment, which requires replacement.
While switching to domestically produced equipment allows for government support, it also requires additional costs, making it a difficult undertaking for many companies.
