A potential expenditure of RUB 240 billion (US$4bn) per year has been earmarked for the programme, starting in 2016, according to a statement from the Ministry of Industry and Trade.
“In 2016 Russia plans to launch a system of ration cards for poorer citizens, which will provide an additional measure of support to the country’s agriculture industry,” said deputy minister of industry and trade Viktor Evtukhov at the Russian Retail Business Summit.
The proposal was designed by the ministry and presented to the government in mid-September. It stipulates measures that should “boost the purchasing power of Russian citizens affected by sanctions [of Western countries], as well as counter-sanctions [food embargo], the decrease in [global] oil prices, the devaluation of the Russian rouble and the growth of inflation”.
'Stimulate consumption'
“The main target of the system is to stimulate consumption, not the accumulation of vital products,” declared Evtukhov. “These should not be put in reserve, but must be delivered to consumers. The programme will invoice only the domestic manufacturers of food products.” He added that according to the ministry’s estimates, each rouble invested in the system would multiply by five or six times, passing through retail, wholesale units, as well as agricultural producers and processors.
George Ostapkovich, director of Institute of Market Research at Russia’s Higher School of Economics, explained that the proposed system already existed in the world. In particular, he cited the program of preferential food purchases in the US, formerly called ‘food stamps’.
According to a forecast by market participants, the recent decline in the population’s purchasing power and price rises will lead to a fall in meat consumption of 3-5% this year.
Retailers
Russian retailers jointly welcomed the project, stating that it would support the depressed meat trade. Meat producers have not yet reacted to the initiative. Experts suggested that the main beneficiaries of the project would be the retailers that participated in the programme.
“First and foremost, this is a mechanism to support the retail segment, or supermarkets,” said Vasily Koltashov, director of the Center for Economic Research at the Russian Institute of Globalisation and Social Movements. “Of course, the system will include the retail networks, which are close to the authorities. So in the first place this will have an influence on certain commercial structures and will create a field for lobbying activities.
“But the second point is that there is also a strong possibility of corruption. As evidenced by the experience of the US and other countries, these [ration] cards could be sold, or people might buy some food, and then re-sell that to gain direct monetary aid.”