Growing Food Prices… Will China Feed All CIS Countries?

Market Leader informed

Market Leader continues its series of features on the current situation in the foods market. Previously we described the situation with rising prices for sugar, bread and diary products, coffee. Now it’s turn for buckwheat prices to draw focus. Early this fall buckwheat nearly disappeared from shelves of many stores in a number of CIS countries. When it appeared, though, it cost three times more.

In late September, Andrey Kashevarov, a member of the antimonopoly agency of the Russian Federation, stated that the sharp rise of prices resulted from collusion of a few wholesalers. The Antimonopoly Agency planned inspections of major suppliers of this product and companies in Altai Krai where the crop was being harvested at that time.

What really caused higher prices for buckwheat in Russia? Andrey Kashevarov confirmed his earlier statement by saying that it’s all about collusion and these people risk getting a serious fine.

However, from their own perspective the agrarians believe the true reason to be crop failure and bad weather conditions that many have been affected by in Russia and the entire European continent alike. Altai has about 10% more land under crop than last year but part of it cannot be harvested because of bad weather. Weather conditions play a major role in growing this cereal and no machinery nor efforts made by producers can help save the crops, according to Vesti.Ru.

Market Leader’s staff correspondents from Land Associations of the Masterforex-V Trading Academy report buckwheat prices in the breakdown of countries:

The global financial crisis distracted the world from other problems for some time. But seemingly stable over the past couple of years, food markets are beginning to change for the worse. Monopoly is still there, the reseller chain becomes increasingly longer. While the question of how the world should be provided with enough food is still pending…

International experience and practice of different countries show that the issue of keeping prices down are solved, though differently in different regions and countries. We referred to sample reasons for and techniques of price regulation for other foods in a variety of countries of the world in our publications: Why and to What Levels Will Sugar Prices Grow in the Near Future? Prices for Bread and Other Foods Getting Higher in Russian Regions, Global Exchanges Demonstrate Food Prices Growth… How Much Will Coffee Cost? There are developments that can serve as a foundation for creation of a simple formula for fighting the food crisis.

One of the most efficient solutions to the problem is shown by China: it takes rigid measures as punishment for economic crimes, up to and including a death penalty!

Moldova’s government, in turn, cuts taxes for production and processing of agricultural products. Price growth is contained in Europe by competition. The invisible hand of the market regulates all processes here. According to unwritten laws of economy, free market conditions will inevitably lead to monopolization and unity of interests of between private and public entities. However, the objective of efficient state is to ensure honest and fair play for market actors and not to degrade to a parasitic and speculative system. This is, nevertheless, a different subject. So far, we are likely to witness other food epics involving other foodstuffs.

Steps taken by national governments to stabilize buckwheat prices:

* introducing state regulation of crop rotation;
* restricting land under highly profitable crops (rape and sunflower);
* state interventions involving purchases of buckwheat so that the state can enter the market with a cheaper cereal in the context of rising prices;
* introducing state regulation of buckwheat prices starting with a limitation on profit margin of processors and finishing with retailers.
* stimulating execution of buckwheat futures contracts.

Experts of the Masterforex-V Trading Academy say the price went down after the harvesting but find it hard to forecast buckwheat prices for the new harvest. The matter is that there is a wide range of factors, both economic and political by nature, that affect pricing. Experts point out that buckwheat prices will remain rather high because of a tense situation in the grains market characterized by rather high buckwheat prices and very high demand from the population.

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