Thursday, July 8, 2010

Window on Eurasia: Breakdown of Distribution System behind Shortfalls in Russian Diet

Paul Goble

Staunton, July 8 – Soviet citizens often did not have an adequate diet because their country did not produce enough of the foods they needed, but their post-Soviet Russian counterparts lack what they need for another reason: the breakdown of the country’s food distribution system which neither the government nor the private sector is able to remedy.
Last week, in releasing a draft Strategy for the Development of Trade through 2020, the Russian industry and trade ministry pointed out that deficits of needed foodstuffs are “not something from the distant Soviet past” but rather an aspect of daily life for many Russians now (
But “if in Soviet times the cause of this deficit was the banal lack of products,” Tatyana Nizhegorodskaya writes in “Novaya versiya,” “then today, a significant part of tasty, useful and natural food simply is not reaching the consumer” because “the logistical structures in the country in practice are not developed.”
The average Russian today, the ministry’s officials say, consumes “68 percent less than the recommended amount of meat, 56 percent less than the necessary amount of fish and fish products, and 88 percent fewer eggs,” shortfalls that cannot but have the most negative impact on Russia’s demographic future.
What makes these figures especially disturbing, Nizhegorodskaya continues, is that “in the last year there was a record catch of fish, and poultry farming at present is one of the most developed branches of the agro-industrial sector. Thus, today, [Russia does not lack the production] of these products.” It lacks a reliable channel to bring them to consumers.
Over the next decade, the “Novaya versiya” journalist says, the ministry intends to address this problem in “two ways.” The first, she says, is “almost utopian.” It calls for the construction of “the necessary infrastructure” by monies from the federal budget. But that is highly unlikely.
According to the ministry’s own calculation, Moscow would need to spend “more than four trillion [US] dollars] to build the necessary amount of highways and another trillion [US] dollars on railroads,” figures that would exceed Russia’s entire GDP in 2008 and thus are truly unthinkable.
The second plan, however, is perhaps equally unrealistic, Nizhegorodskaya suggests. It calls for “private investors” to pay for all this, creating the infrastructure they would need to make a profit. But “representatives of business are not hurrying to actively participate in such projects,” she notes.
Elena Tyurina, the director of the Moscow Institute of Agrarian Marketing, points out that private investors are not doing so because they do not see any profit to be made anytime soon given that much of the infrastructure in the Russian Federation is either out of date or completely lacking. Consequently, they would have to shoulder almost all of the costs.
Moreover, Tyurina continues, “in the majority of domestic supply markets, the investment climate remains risky and unstable.” Even in the grain sector, where export possibilities are large and profitable, the elevators are “old” and left over from Soviet times. The construction of replacements “is not being undertaken by any company.”
“In the fish processing industry,” Nizhegorodskaya continues, “the situation is still more difficult: the record catch of last year in fact was not able to reach the consumer because to ship such a significant amount of fish was simply beyond the capacity of the system.” As a result, many Russians did not get that important source of food either.
Andrey Danilenko, the head of the Russian Farms Company, pointed out that “20 years ago, consumption of milk products was 40 percent higher than now. But there were no real alternatives, and the culture of consumption was different: the breakfast of Soviet citizens invariably consisted of kefir or milk with bread.”
But today, he said, “there are not even advertisements which would say that a class of milk is something health.” As a result, there isn’t the demand for all the milk and milk products that the sector could in fact produce. At present, he said, it could generate almost twice as much milk production.
As a result, Nizhegorodskaya concludes, Russia and Russian consumers are in a vicious circle: “Private investors are afraid to invest such significant sums in the development of logistical infrastructure because they are waiting for government support. But the government in its turn expects that the first step should be made by the representatives of business.”

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