Excessive demand for buckwheat due to the spread of the coronavirus led to its disappearance in some retail networks of Moscow in March. What is behind this phenomenon?
Information about spread of coronavirus and the fall of the ruble provoked an increased demand for commodities. In Russia, the main product, which began to stock up for the future, was buckwheat. At the peak of demand, which came in mid-March, she had disappeared from the shelves of Moscow stores.
What is really happening in the market of buckwheat in Russia, is there any reason to fear the real deficit and who makes a fuss, figuring DW.
Dynamics of production and domestic demand for buckwheat
Russia is the world leader in buckwheat production. Peak fees in the country, according to consulting group “Tekart”, came in 2016-2017 and $ 1.2 and 1.5 million tons respectively. “In 2017 were recorded overproduction, which was associated with an increase in yield and acreage. Excess supply led to falling prices. In the result, it was decided to cut the crops, which was partially implemented in 2018. The collection then amounted to 932 thousand tons, in 2019 784 thousand,” – said DW in the company.
If you look at the output directly buckwheat (product which is obtained by processing of buckwheat with the help of peeling and steaming or roasting), then in 2017 they made 495,6 thousand tons in 2018 493,5 thousand, and, according to preliminary data for 2019, – 458,1 thousand tons. These data are based on government statistics has led DW the head of the analytical Department of the company Direct INFO Eugene Ivanov.
According to experts, the consumption of buckwheat in Russia is much lower volumes of production: “In 2019 it amounted to 360-380 thousand tons, an average of about 2.5 kg per capita per year.” Approximately the same estimate gives the Director of the Center for agrofood policy, Ranepa by Natalia shagaida: “Russians consume a maximum of 3 kg of buckwheat per year. The more regrettable to observe an excessive demand, which – according to experience from previous crises – usually leads to the fact that the spoiled stocks are in the trash” she said to DW.
What happens in the warehouses and why the shelves are still empty
Warehouse stocks of buckwheat in Russia enough to cover even the increased needs of Russians. According to the latest “Tekart”, the volume of stocks of buckwheat in Russia is estimated at 350 thousand tons. However, despite this, in the European part of the country in March, there were serious shortages of this product in the stores. The reasons for this lie in the difficulties of logistics.
“From the point of view of volumes of stocks situation in the beginning of 2020 looks like a standard, we cannot say that there was a pleasure deficit,” – said Eugene Ivanov. – However, the vast majority of ready-made buckwheat is in Siberia, and the vast majority of consumers in the European part of Russia, so it will take time to products came from the warehouses of retail”.
Not the last role in the disruption played and Mercantile interests of suppliers. “Increased demand has allowed them to raise prices,” – noted in “TECHART”. So, most likely, the delay in the replenishment of store shelves stems from the fact that at this time, retailers and suppliers agreed on the prices. “When such shocks and recorded a sharp jump in demand, the suppliers try to raise prices, will try to do it and those who sell buckwheat in bulk (up to its packaging. – Ed.). But all raise the price will not succeed, because at the end of the chain are the retailers, who do not need expensive and bad sold the goods on the shelves,” – said DW Director of the analytical center “Sovekon” Andrei Sizov.
What will happen with the prices for buckwheat
According to him, the full restoration of the proposals will occur as soon as the suppliers and retailers will come to consensus, “Then we will see filling the shelves, perhaps with higher prices.” It is worth noting that the first wave of growth of prices for buckwheat was observed in the fall of 2019, when it became clear that the harvest will be lower than in 2018.
Wholesale producer prices of cereals increased then by about two times: in the middle of the year, they accounted for about 10 rubles per kilogram by the end of the year reached 20 rubles. The price of the producers of packaged products in December amounted to 36 rubles per kilogram, and the retail – 64.3 ruble in Russia on average. “The mediators in the face of wholesale companies and retail chains at the moment collectively clocked about 80% of the producers ‘prices”, – says Evgeny Ivanov.
According to Direct INFO, as of February 2020 average retail price in Russia was 66 rubles, in Moscow – 89 rubles. Further, according to the forecast Eugene Ivanov, the inevitable new growth of prices: “to Prevent him can only regulators. Saving prices is possible only through the use of non-market methods”. Despite the fact that the monopoly on the production of buckwheat in Russia does not exist, the market is quite concentrated: the top 10 leading enterprises produce for 84.7% of the total production (data for 2018), and the top 20 – to 99.2%. In the list of largest manufacturers – “agro-Alliance” AFG “national”, “Mistral”, “Resource” (brand of “Uvelka”), bugulminskiy combine of grain products No. 1 (BKHP # 1) and others.
The Director of “Sovekon”, meanwhile, believes government intervention in the pricing of buckwheat unnecessary. First, in his opinion, the market is quite competitive. Second, the consumer deserves to pay for the goods, unjustified demand which he himself had created. Similar situation in Russia has been even during the high crop – for example, in 2016. “Then amid increased demand also recorded a strong rise in prices. This is largely due to the media which made from buckwheat elephant”, – said Sizov.
Director, Center for agrofood policy, Ranepa by Natalia shagaida explains the choice of the Russians that buckwheat is a low standard of living in the country: “the money that a person pays for a pack of buckwheat, you can buy a jar of canned food, but she’s eaten at one time, and packs of buckwheat long enough. Many such logic”.
Not last role is played by the factor of habit. “Russia is one of the traditional products. Buckwheat distinguishes Russian cuisine from others. This item is a marker, which is determined by the image developed over many years. It is also important that in the memory of the sharp rise in prices of buckwheat, which happened about five years ago. Such bursts are usually remembered and also affect consumer behavior,” expressed his version of DW sociologist “Levada-center” Marina Krasilnikova.