MIT: "hard" and "soft" tools for stabilizing prices for basic foodstuffs

According to the facts of publication in the media and social networks of information about the gradual abandonment of "strict" regulation of prices for socially important food products (SIFP), starting from 2023, the Ministry of Trade and Integration of the Republic of Kazakhstan explains the following.

In order to prevent a shortage of basic foodstuffs, to balance the interests of domestic business and the population, the state will gradually move away from using "rigid" instruments to stabilize prices for SIFP. Such a tool is the current Rules for setting retail price thresholds and the size of the maximum allowable retail prices for SIFP (Rules).  Over the years of practice, their use has not proven its effectiveness, caused a lot of complaints from business. 

With this in mind, the Ministry of Trade and Integration has now developed a new draft of the Rules. This document defines the types of calculations of local executive bodies to establish the size of the threshold values of retail prices for SIFP, taking into account the cost and selling prices of producers of socially significant food products, logistics costs, trade surcharges of wholesale and retail sellers in the amount of no more than 15%, storage costs, as well as the prevention of unprofitable activities of producers and subjects of domestic trade.

In general, the state intends to gradually move to "soft" regulation, which allows encouraging agricultural producers to independently stabilize prices for their products. These are methods such as changing approaches to financing agricultural producers by "revolving schemes" directly to producers, holding agricultural fairs, analyzing the chain of activities and identifying unproductive intermediaries within the framework of the work of regional commissions that have a direct impact on food pricing. In addition, at present, the Ministry of Agriculture has developed amendments to the model rules of price stabilization mechanisms for SIFP, providing for the inclusion of the concept of "forward" as a price stabilization mechanism. This will allow agricultural producers to finance in advance the production of socially significant goods with their subsequent delivery at fixed prices.