The epidemic of greed is numbered

2020, as follows from the study of the PRUE. Plekhanov, became truly gold not only for food retail, but also for production chains in production and processing in certain sectors of the agricultural market – including sugar and vegetable oil producers, in respect of which the government was forced to introduce temporary state regulation of prices. In all agro-processing, according to the research, sales revenue increased by 11%, sales profit – by 20%. From this point of view, the government’s accusations of individual players in this market of “greed” and exploitation of the agiotage demand for food are not at all surprising: on the basis of consumer concerns in the spring and summer of 2020, only agricultural companies, according to the REU, earned at least 11 billion rubles. additional net profit.

Research of the Russian Economic University (REU) named after Plekhanova analyzes the open reports of the largest companies in the agricultural processing and food industries in the Russian Federation, as well as food retail for 2020. Recall that Rosstat data on the financial result, including in the sectoral aspect, give a rather superficial idea of ​​what exactly happened in the food market at the height of the coronavirus epidemic in 2020: Rosstat estimates the financial results based on the formal industry affiliation of companies and only in the agricultural industry. , food industry and retail in general. Much more revealing is the corporate reporting data that appears for 2020 from the end of March 2021: PRUE analysts used primary data from the reporting of the SPARK-Interfax database (the largest agro-processing and food retail companies), consolidating gross and net profit estimates into the industry average , as well as the profitability of sales for individual product groups.

The fact that the agricultural industry, unlike many other industries, lost practically nothing in lockdowns, was obvious back in 2020 from the figures for industrial production in agriculture – as well as the fact that companies and retail made additional money on the rush demand for products in the spring-summer of 2020. The question of whether such profits were obtained later, after the start of price increases in world markets (and, as a consequence, within Russia), was considered controversial – both agroindustry and retail referred to an increase in costs due to the pandemic.

The work of the PRUE makes it possible to answer most of these questions: there were super profits in the conjuncture, they were obviously higher than the additional costs due to COVID, in addition, it is for those product groups for which the White House introduced soft state regulation of pricing (duties, export quotas), these the additional income was especially high.

According to Olga Lebedinskaya, Associate Professor of the Department of Economic Statistics of the PRUE, according to the results of work in 2020, the return on assets of food producers in the Russian Federation was almost twice the average Russian value of the return on assets in industry.

Sales revenues for the industry as a whole grew by 11% compared to 2019, sales profit – by 20%: if the first figure partially includes the rise in inflation, the second significantly increases net profits. The data of the companies in the PRUE sample show that the largest food producers in the Russian Federation in terms of revenue dynamics in 2020 increased their sales by 2019 by 32% (by 145 billion rubles – to 596 billion rubles). The net profit of the companies in the sample increased by 69% – by 11 billion rubles, to 27 billion rubles. The average profitability of food sales by producers grew by 1.5% – this shows that the agricultural sector, taking advantage of additional demand (mainly due to rush purchases), felt more than confident in the midst of the crisis – for some organizations, according to the PRUE, the indicator exceeded twice.

In turn, things were even better in food retail. According to the REU sample, in 2020, the return on assets in the trade industry was almost twice the Russian average, sales revenues for the industry as a whole also increased by 41% compared to 2019, and sales profit increased by almost half. A number of companies moved from the unprofitable category to profitable ones, and some groups more than doubled their profitability. The profitability of the sale of foodstuffs in the chains was 4.9%, which is 1.4 percentage points (p.p.) more than in 2019, the return on assets was 8.0% (1.1 p.p. more than in 2019 ).

The dynamics in the production of vegetable oil and sugar is especially indicative. As a reminder, the price fixing agreements in 2021, initiated by the government, were in effect only for these two products. The PRUE openly uses the term “super-marginality / high marginality” in relation to producers and sellers in this product group: the restrictions, which in the government’s report to the State Duma on May 12 were justified by the “greed” of individual players, in reality only limited the amount of margin in the sale of these products, restraining such their retail prices for the final consumerla – population.

Note that in the long term, such “greed” is of little meaning, as is the constant state regulation of prices (as the Bank of Russia has repeatedly noted, imbalances in the industry are growing, and the structure of consumption is changing).

It also reduces the stability of other food producers, so criticism of sugar and vegetable oil producers has been tacitly supported by other food producers in industry associations. But as a short-term “skimming” tactic, it is super beneficial, especially for midsize producers and weak retailers with a short planning horizon. The PRUE does not specify the names of individual super-marginal companies that made money in the midst of the coronavirus on butter and sugar, but industry analysts know them no worse than the government, which now, unlike the crises of previous years, is able to track export flows, and internal operations, and final sales prices. Nevertheless, super profits are temporary, the food market is highly competitive, but investments in it do not pay off quickly, but problems with reputation are remembered for a long time.

Afanasy Sborov

How Two Foods Got Ultra High Margin

Vegetable oil and sugar are two foodstuffs that the government has had to intervene in pricing since the end of 2020. According to a study by the REU, the revenue of 124 Russian sugar producers in 2020 increased by 8%, the profitability of sales from a negative (minus 30.2%) increased immediately to 15%, the net profit from sales almost doubled (111.6%), the REU states … In the oilseed sector, the performance is even better. The revenue of 24 manufacturing companies, according to the reporting data, increased by 29%, the net profit of the companies increased by an unprecedented 196%. Some of the profits were earned in the foreign market – vegetable oil exported in 2020 more than in 2019, by 18%, sugar – by 76.1%, prices in world markets are higher than Russian ones, however, it is unlikely that producers did not increase the profitability of domestic Russian sales. in any case, retail made money on these products.

Afanasy Sborov