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Price increase for socially significant food products will not exceed 6% by the end of 2020 — Ministry of Trade and Integration

Tuesday, 15 September 2020, 10:27:27

At a government session chaired by Prime Minister Askar Mamin, issues of price regulation for socially important goods and food supply were considered. Minister of Trade and Integration Bakhyt Sultanov reported on the ongoing work on monitoring prices and response measures.

Since the beginning of this year, prices for socially significant food products have increased by 4.4%. The main growth was in buckwheat, sugar, carrots and potatoes. The main reason is the reduction in acreage.

According to Sultanov, since the beginning of the year, a rise in prices for socially significant goods has been observed in all regions. However, for the majority of goods, the demand on the domestic market was satisfied by domestic food products.

“There is a decrease in prices for five types of socially significant goods. Thus, prices for cabbage decreased by 21.4%. The overall growth compared to the same period in 2019 is two times lower. 90% of this growth, that is 4.1 percentage points, was recorded during the introduction of the state of emergency in the country,” the minister said.

The main reasons for this were changes in demand for food products associated with quarantine measures, changes in logistics and transportation of goods, shortages in the off-season.

At the same time, since May 2020, the rise in prices began to be regulated. In particular, prices in May increased by 0.1%, in June and July they did not increase, and in August they even decreased by — 1%. To stabilize prices, by a joint order of the Ministries of Trade and Integration, National Economy and Agriculture, the maximum prices for 9 socially important goods were set during the state of emergency.

In addition, the ministry sent proposals to the akimats to monitor compliance by domestic trade entities with the maximum retail prices.

In pursuance of these proposals, the akimats and territorial divisions of the Ministry are constantly monitoring, as a result of which 180 administrative fines were imposed.

“From March 22, 2020, for the period of the emergency regime, a ban was introduced on the export of 7 goods (buckwheat, sugar, potatoes, onions (garlic), sunflower seeds, sunflower oil, buckwheat groats), as well as a monthly quotation for the export of goods ( carrots, turnips, beets, cabbage, wheat flour and soft wheat). In order to prevent price increases from March to September 2020, the value added tax rate has been reduced from 12% to 8% on the import and sale of socially significant food products,” Sultanov said.

As the minister noted, local executive bodies use instruments such as a ‘reverse scheme,’ forward purchase and the formation of stabilization funds.

“The stabilization funds have formed 27.7 thousand tons of food and forward contracts for the supply of 21.6 thousand tons have been concluded. 14.2 billion tenge has been allocated from local budgets for the ‘reverse scheme’ with the obligation to curb prices for socially significant goods," Sultanov informed.

This market mechanism is already showing its effectiveness. Significant funds have been allocated in the city of Almaty in comparison with other regions. As a result, since the beginning of the year, prices for socially important goods in the city have increased by 2.2%. This is the lowest in the country.

At the same time, in Zhambyl and North Kazakhstan regions, funds were not allocated for the reverse scheme, as a result, the increase in prices for socially significant goods in these regions amounted to 6.1% and 5.7%, respectively.

According to Sultanov, antimonopoly regulation measures are one of the important instruments for stabilizing prices.

The Committee for the Protection and Development of Competition constantly monitors the internal market for collusion.

So, this year, 293 notifications were issued to market entities for the production and sale of food, fruit and vegetable and meat products, and 13 investigations were carried out.

“According to our estimates, the rise in prices for socially important food products will stabilize and will not exceed 6% by the end of the year. This estimate is taking into account all the current factors and the measures taken by the state to stabilize prices. In general, the main factors of price stabilization were the ongoing systematic work on the development of civilized retail and trade infrastructure, financing of the circulating scheme, strengthening monitoring and coordination of work within the framework of the adopted Roadmap for short and medium term measures to curb prices for socially significant food grain resources of JSC Food Contract Corporation to regional flour-grinding companies,’’ explained the minister.

On the part of the market, the increase in production volumes in agriculture and the development of civilized trade also have a positive effect on the reduction of prices.

“To monitor prices for socially important goods online, territorial divisions of the Ministry and akimats use the online system dosmart.kz. This system allows collecting up-to-date data from individuals, including photos of checks for processing by ML technologies and obtaining a 1% cashback, as well as monitoring prices and product availability in stores,” the minister said.

Currently, within the framework of price stabilization, the Ministry is carrying out the following systematic work:

First. Providing access to long-term finance for the modernization of non-stationary trading markets and purchasing trade equipment.

Second. Development of a set of measures for the development of electronic commerce.

Third. Work is underway to create a national distribution system.

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