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Moscow Times
October 25, 2007
Food Industry Agrees on Price Freeze
By Max Delany
Staff Writer
The food industry agreed on Wednesday to freeze prices on a range of
foodstuffs as the government seeks to combat a surge in the cost of basic
staples, an Agriculture Ministry spokeswoman said.
The deal, thrashed out at meetings at the Agriculture Ministry last week,
will see producers and retailers agree to fix prices on a number of socially
significant products, including milk, vegetable oil, eggs and bread, RIA-Novosti
reported.
Companies involved in the pact include retail chains Auchan, Lenta, Metro,
Mosmart, Pyatyorochka and Perekryostok, as well as dairy firms Unimilk and
Wimm-Bill-Dann.
Industry and ministry representatives confirmed that the agreement would be
backdated to Oct. 15 and run until Jan. 31, Wimm-Bill-Dann chief executive David
Yakobashvili said, Interfax reported.
The pact is being seen as a crucial way to stave off public discontent over
sharp rises in food prices over the past few months and to ease fears that
overall inflation could reach double digits this year.
Prices on vegetable oil rose 13.5 percent and the price of pasteurized milk
by 9.4 percent in September, according to figures from the State Statistics
Service.
Industry and government representatives have been keen to stress that the
price freeze was put forward by the food industry, but commentators have
suggested that the move came under political pressure ahead of State Duma
elections in December.
In recent weeks, government officials, led by President Vladimir Putin and
Prime Minister Viktor Zubkov, have sought to shift the blame for the sharp
prices rises onto retailers and producers.
The agreement cleared one potential bureaucratic hurdle when the Federal
Anti-Monopoly Service gave its approval to the proposed price freeze in a
statement released Wednesday.
"The Federal Anti-Monopoly Service considers the agreement permissible, as it
is only temporary and in the interests of consumers," the statement said.
The price freeze agreement came despite apparent opposition to the move from
some senior government quarters.
In an interview published on RIA-Novosti's web site Wednesday, Finance
Minister Alexei Kudrin spoke out against price-fixing measures.
"We should not freeze prices. It is a market and on the market, prices cannot
be frozen. That would be a mistake," Kudrin told the agency.
Commenting on negotiations between the government and food retailers and
producers, Kudrin said the measure would only be very temporary.
"We are only doing this to avoid further price rises. To avoid a move toward
a price peak, a price shock," he said.
In a further sign that authorities are actively cracking down on retailers,
the Federal Anti-Monopoly Service announced Tuesday that it had opened up to 40
investigations against traders accused of speculating on food price rises,
RIA-Novosti reported.
"The investigations primarily concern the abuse of monopolistic positions in
the food goods sector," said Andrei Tsarikovsky, deputy head of the service.
The service has checked markets selling milk, butter, meat and cheese in the
Krasnoyarsk, Tomsk, Perm, Penza, Rostov and Ivanov regions, Tsarikovsky said.
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