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Putin's Drive to Tame Food Prices Threatens Russian Grain Sector
USAgNet - 07/22/2021

During a televised session with ordinary Russians last month, a woman pressed President Vladimir Putin on high food prices. Valentina Sleptsova challenged the president on why bananas from Ecuador are now cheaper in Russia than domestically produced carrots and asked how her mother could survive on a “subsistence wage” with the cost of staples like potatoes so high, according to a recording of the annual event.

Reuters reports that Putin acknowledged high food costs were a problem, including with “the so-called borsch basket” of basic vegetables, blaming global price increases and domestic shortages.

But he said, without elaborating, that the Russian government had taken steps to address the issue and that other measures were being discussed.

Sleptsova represents a problem for Putin, who relies on broad public consent.

The steep increases in consumer prices are unsettling some voters, particularly older Russians on small pensions who do not want to see a return to the 1990s when skyrocketing inflation led to food shortages.

That has prompted Putin to push the government to take steps to tackle inflation.

The government’s steps have included a tax on wheat exports, which was introduced last month on a permanent basis, and capping the retail price on other basic foodstuffs.

But in doing so, the president faces a tough choice: in trying to head off discontent among voters at rising prices, he risks hurting Russia’s agricultural sector, with the country’s farmers complaining the new taxes are discouraging them from making long-term investments.

The moves by Russia, the world’s top wheat exporter, also have fed inflation in other countries by driving up the cost of grain.

An increase in the export tax unveiled in mid-January, for example, sent global prices to their highest levels in seven years.

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