That's what prices are for, to grow... This sad joke seems to be becoming the main trend in the domestic consumer market. But what is the reason for the high cost, what kind of work is carried out by authorized state bodies in order to curb the appetites of sellers and intermediaries? Acting Head of the Trade Committee of the Ministry of Trade and Integration of the Republic of Kazakhstan Aidar Abildabekov answered these and other questions to the correspondent of "Kazakhstanskaya Pravda".
– Aidar Akhmetbekovich, prices, especially for food, are the most sensitive "nerve" of the consumer community. Tell us about the main indicators and trends observed in this area today…
– I would like to emphasize right away: the price increase is not only for food – everything is getting more expensive. And the beginning of this process was laid back in the pandemic era. Remember, at a time when many industries were up, the state began to issue benefits to citizens so that they could survive...
When the lockdowns ended, quarantine restrictions stopped, people who escaped from months of imprisonment in their apartments rushed to shopping malls and shops to buy. However, not everything was found there and not in the quantity that we would like. As a result, demand exceeded supply – and prices went up.
Then, in February of last year, the military conflict in Ukraine began. Anti-Russian sanctions followed. As a result, the existing logistics chains were disrupted, which led to interruptions in the supply of a number of important goods to Kazakhstan.
Currency exchange rate changes also contributed to the price increase. When the dollar rose in price, the ruble fell in price. There was an excess of cheap onions and potatoes in the Kazakh food market during this period. But they were bought up in a short time.
After that, onions and potatoes began to rise in price. The cost of seeds and fertilizers has increased. Domestic dairy products have risen in price. They were affected, in turn, by the increase in the cost of plastic and paper packaging imported, mainly from Russia.
The task of our committee is to control and regulate prices for a group of 19 items of socially significant food (SSF), the most important for human life. This list includes: wheat flour of the first grade, wheat bread (molded), horns (weight). From cereals – buckwheat (kernel, weight), ground rice. The socially significant list of vegetables also consists of potatoes, table carrots, onions, white cabbage.
The list of SSF also includes granulated sugar, sunflower oil, beef (shoulder-breast part with bones), chicken (femur and tibia with pulp adjacent to it), chicken egg (of the first category), pasteurized milk (2.5 percent fat content) and the same fat content kefir, butter, cottage cheese 5-9% fat content.
Finally, the basic types of food include table salt (except "Extra").
– What does the situation with the price increase look like today? Please name the main official indicators.
– According to statistics, the price growth index for socially significant food products in 2022 amounted to 22.7%. For example, sugar prices increased by 65.5%, onions – by 36.1%, rice – by 36%, horns – by 34.8%, flour – by 27.4%, chicken – by 24.6%, eggs – by 24.4%, buckwheat groats – by 23.8%., for milk – by 22.9%. From the entire list of socially significant products for the population, only cabbage (-14.3%) and carrots (-0.2%) have fallen in price.
In the context of the regions, the picture is as follows. In Ulytau region, the price growth showed 31.6%, in Astana – 25.6%, Aktobe region – 24.9%, Mangystau – 24.8%, Turkestan – 24.6%, West Kazakhstan - 24.1%, Karaganda – 23.9%.
The North Kazakhstan region and Almaty complete this list with the same indicator of average price growth of 22.2%.
– One of the factors influencing prices, you called the rise in price of imported packaging material. In this regard, the question arises: what prevents us from producing it at home?
– The fact is that mainly raw materials are imported – polymer granules, from which vacuum packages are made. Manufacturers have processing lines where dairy and a number of other products are packaged.
But we do not have consumables, it has always been easier and more convenient for manufacturers to import them. Due to the geopolitical situation, their prices have increased. Maybe the current situation will push Kazakhstani business representatives to find a solution to the problem.
– It is impossible to bypass the topic of sugar. What is being done to eliminate the shortage of this product?
– We have to admit: sugar in the general list of SSF gives the highest price growth index. The whole problem is that the republic does not yet have enough of its own raw materials to load the existing sugar factories. Sugar beet grown for this purpose can cover only about 10-15% of the total need for a sweet product.
Another 35% of the volume in demand is produced from so-called raw sugar purchased in Brazil. It is a solid sucrose obtained after boiling sugar cane. The remaining 58% of this product is imported to us from Russia in the form of ready-made sugar.
In accordance with the instructions of the Head of State, a comprehensive plan for the development of the sugar industry for 2022-2023 has been developed and is being implemented, providing for measures aimed at reducing import dependence and transition to self-sufficiency.
The implementation of this plan will allow in the next five years to increase the volume of sugar production from domestic raw materials to 250 thousand tons annually.
In addition, mechanisms such as a stabilization fund, a loan to business entities, a "revolving scheme", and forward purchase are used to saturate the domestic market and keep prices down. A mechanism has been worked out according to which a part of the SEC funds is provided to sugar factories for the purchase of a three-month supply of cane raw materials with counter obligations and securing funds.
To date, 19 regions have signed loan agreements totaling 20.9 million tenge.
– What kind of work is being carried out to identify chains of intermediaries who unreasonably overestimate trade surcharges? After all, this is also a factor in the growth of food prices.
– According to the law on trade activity in Kazakhstan, the cost premium on the list of socially significant goods should not exceed 15%. But in fact, this indicator often reaches 20-40%. Commissions to identify intermediary schemes along the entire food pricing chain were established in 2021 on behalf of the Head of State. 453 meetings were held in 2022, 125 since the beginning of 2023.
It should be noted that the work on identifying intermediary schemes is complicated by the current moratorium on inspections of small and medium-sized businesses. That is, commissions, mobile groups do not have the right to check the business.
In the current situation, electronic invoices are the only tool for identifying intermediary schemes that overestimate the trade premium. They contain information about the name and details of the seller and buyer, the list of goods or services, their price, cost.
Thanks to the analysis of invoices for 2022, 1,034 subjects of domestic trade were identified. 310 of them have an excess of the trade allowance. Only during January 2023, 102 intermediary chains were checked. Four of them also committed the above–mentioned violation - unjustifiably overstated the price of the goods.
It must be admitted that in rural areas, especially in remote villages, there is no need to talk about the use of electronic invoices. A farmer who sells his goods to an intermediary does not have a document that makes it possible to identify the excess of the trade allowance by intermediaries.
At the same time, small farms and personal subsidiary farms, which have not yet reached this digital operation, supply most of the meat to domestic markets. At the same time, I repeat, the invoice remains the only tool for detecting abuses in the chains of intermediaries.
– What part of the general trading field, which is occupied by a group of socially significant food products, is currently "closed" by invoices?
– I can't name the exact figure now. Currently, they cover only large companies, agricultural enterprises, in which there are accounting services. We are working to ensure that every farmer uses this document.
Technically, it will be possible to do this using an application on a cell phone. We are talking about a simple operation that will help interested government agencies to restore order in the field of trade, to prevent an increase in food prices. That's just the expansion of the coverage of this digital service of agricultural producers is creaking. Therefore, the commissions for the identification of intermediary schemes, as they say, have their hands tied: they do not have a tool in the form of invoices to perform their task.
– In this case, the classic question arises: what to do? Prices continue to rise... Maybe we should talk about the expediency of lifting the moratorium on inspections of business entities?
– I think it is still possible to find a way to solve the problem of identifying unscrupulous intermediaries. One of them is the coverage of the entire sphere of trade in electronic invoices. Despite the existing difficulties, work to identify violations in the activities of intermediary schemes is actively underway in all regions of the country. It is assigned to the territorial divisions of the Trade Committee of the Ministry of Trade and Integration, local executive bodies.
Akimats of different levels work with businesses, retail chains, wholesalers and create conditions for them. Regional commissions have been organized to investigate intermediary schemes, control of trade surcharges to trade entities is carried out, social corners are organized where the sale of SSF is carried out with minimal trade surcharges.
Memoranda are concluded with commercial facilities, agricultural producers on reducing the trade premium, mechanisms are used to approve threshold and marginal prices. Weekly monitoring and control of prices for socially important food is carried out, the need for it and food stocks in the regions are analyzed.
In addition, weekly meetings with the participation of representatives of all regions of the country are held under the chairmanship of Prime Minister Alikhan Smailov. During these meetings, the problems of the regions are considered, proposals are formed, specific instructions are given.
In order to curb the prices of SSF, agricultural fairs are regularly organized, at which goods are sold at prices 10-20% below market prices. In 2022, 11 thousand 491 fairs were held in the country.
– The President of the country has repeatedly touched upon the topic of improving the activities of stabilization funds. Tell us about their work.
– I think that the stabilization funds have proven themselves well as a mechanism for restraining prices for SSF. Their work is aimed at saturating the market with vegetables in the off-season, smoothing and preventing seasonal price fluctuations. Currently, forward purchase mechanisms are in place, which allow contracts to be concluded in advance and ensure stable prices for vegetables in the off-season and their fixed volumes.
In order to improve these mechanisms, amendments have been made to the approved model rules and mechanisms for stabilizing prices for SSF.
The Ministry of Trade and Integration is working on new supply chains for the seasonal purchase of onions, potatoes, carrots and cabbage from Tajikistan, Iran, Pakistan and Uzbekistan. Contacts have been established with more than 200 vegetable producers from Uzbekistan.
– Readers may have a question: after all, these vegetables grow well in Kazakhstan, why not establish their production at home?
– We are talking about early vegetables, which we do not fully provide ourselves with yet. In addition, these are forced measures to maintain prices and market stability. When we start growing our own vegetables, the need to import them will disappear by itself.
The Government is taking measures to control and reduce inflation for 2022-2023, providing for the implementation of operational measures. These include strengthening state control over trade surcharges, as well as tariff and non–tariff regulation.
A plan to ensure food security for 2022-2024 is being implemented. Its purpose is to ensure the physical and economic accessibility of food products, the quality and safety of food products.
It is planned to implement 150 investment projects: 85 in 2023, 65 in 2024. This will provide the population with food of domestic production.
In 2024, it is planned to achieve one hundred percent supply of the main types of imported agricultural products, which include apples, fish, sausages, cheeses, cottage cheese and poultry meat.