Officials said that this would create a transparent market pricing tool and would be useful for both Russian consumers and producers.
“The financial instruments [of the commodity exchange] could help us to reduce the volatility of prices and would create transparent pricing on the market. In the first stage – during the first two-three years – we are planning to introduce tools such as double warehouse receipts and deliverable contracts. The use of futures and options on our stock exchange will also appear more,” said acting director of the Department of Economics and Analysis of the Ministry of Agriculture, Victoria Vlasova.
However, she added that producers would not be forced to go to the commodity exchange. “We intend to implement these mechanisms without any revolutions, gradually, without any force,” she said.
A source in the Ministry told Globalmeatnews.com that a commodity exchange for meat would help ensure that retail prices better reflected the cost of production.
“In the Russian market, the average consumer price [on the grocery shelves] in some regions can exceed the purchasing price [the price producers sell their products to resellers] by more than five times. This happens because of a large number of intermediaries who do not produce anything, but take the lion’s share of the profits of producers. The commodity exchange will allow us to change this situation,” said the source.
Russia’s Anti-Monopoly Service has already supported the project and announced that it is preparing proposals for the implementation of exchange mechanisms in the market. Sugar producers have already spoken out against the measure, but milk and meat manufacturers have in general agreed that the commodity exchanges would be useful, noting that they would reduce prices and improve the quality control of meat and mild products.
“Stock trade is the most reliable way to deal with dumping and lack of transparency of pricing. It is also possible to increase the quality of our products, giving veterinary certificates only to those producers who put products on stock trades,” said the head of the National Union of Milk Producers, Andrey Danilenko.