Why Strategic Product Prices Soared
No sooner had the authorities shoved sugar into the sane price range than salt was on the agenda. Producers of a bitter but strategic product have announced a possible rise in price. Logistics is to blame for everything: a sharp increase in demand for gondola cars has caused a shortage of capacity for manufacturers and suppliers of those who trade in salt. The Association of Producers and Suppliers of Food Products “Rusprodsoyuz” emphasized that logistical difficulties can lead to a disruption in supplies, which will inevitably affect the cost of salt. MK experts are convinced that the rise in transportation costs will provoke a rise in retail prices: plus 20-25% in the near future.
An unexpected obstacle stood in the way of the “domestic producer” and import substitution. There is no salt deficiency – there will be a shortage of gondola cars for its delivery. The peculiarity of the market for this product is that the main production sites are located in areas remote from consumers. Therefore, the transport factor is of particular importance, which accounts for a significant part of the cost.
Now the supply of gondola cars for transporting salt has sharply decreased: almost two times less than necessary. The shortage of gondola cars is explained by transport workers by the sharply increased need for them for loading other goods – coal, crushed stone, building materials, which soared in demand from the second quarter of 2021. This leads to delays in the supply of salt, and ultimately to an increase in the price of the goods.
Rusprodsoyuz asked the Transport Ministry to investigate the situation. Now the operators are planning to return up to 20 thousand gondola cars to this area, which, according to the plans, will solve the problem.
Salt in Russia is a strategic commodity. Until now, its price did not give consumers much excitement. On July 5, 2021, it has risen in price by only 1.12% since the beginning of the year, according to Rosstat. Rusprodsoyuz, which includes salt producers, assumes that its production in Russia this year will amount to at least 1.47 million tons, which is 1.5-2% more than in 2020. The share of Russian manufacturers last year was 63%, up 1.7% compared to 2019.
“This is due to the fact that imported salt rose in price due to external conditions and the growth of the exchange rate against the ruble,” says Mark Goikhman, chief analyst at TeleTrade. – Domestic enterprises did not raise prices for their raw materials. In addition, the reduction in imports is associated with the introduction of new industries in Russia. “
Rusprodsoyuz provides the following statistics: “The main importers of salt to Russia last year were Belarus (supplies decreased by 2.65%, to 312.3 thousand tons), Kazakhstan (decreased by 5.04%, to 185.5 thousand tons), Azerbaijan (a decrease of almost 6%, to 21.4 thousand tons), Turkey (an increase of 34.92%, to 17 thousand tons), Iran (an increase of 91.39%, to 2 thousand tons). tons) “. If we talk about cost, then retail prices by region differ significantly – from 8 to 30 rubles. per 1 kg, according to the Tsenometer service.
“Since salt in our country is produced by only a few enterprises and they are quite far from large agglomerations and distribution centers, the cost of logistics makes up a large share in the cost of the final product,” says Artem Deev, head of the analytical department at AMarkets. “Therefore, difficulties with transportation due to the lack of the required number of wagons can lead to an increase in retail prices for salt.”
Note that in addition to the logistics component and the ruble exchange rate, the cost of production and taxes affect the price of goods. And the tax on the extraction of minerals (MET) this year has been increased by the government 3.5 times. Therefore, in any case, we should expect an increase in retail prices for salt.
“Retail prices for salt will rise sharply in the near future: 20-25% is easy,” predicts Anna Vovk, chair of the MCCI committee on the development of the investment environment for business.