May 20 2003, 13:48 Gazeta.ru

Increase of bread prices in Russia is indispensable, experts say

Increase of bread prices in Russia is indispensable, the President of Russian Bread Baking Union Anatoly Kosovan said to the press-conference at the opening of exhibition "Present-Day Bread Baking" in Moscow.

The price for bread baking flour has risen significantly since the beginning of the year, Kosovan said. "While in January the price for first grade wheat flour in Krasnodar Krai was 2,900 roubles per tonne, in May it has risen to 4,900 roubles per tonne, which is a 68 percent increase", he said. The same flour in Moscow now costs 5,430 roubles per tonne against 4,650 roubles per tonne in January. (31 rouble = $1)

Kosovan says the bread prices have not been significantly rising up to now only due to the fact that the baking plants have been working on the account of declining profitability. However, this cannot last for long, he said.

According to him, average profitability of bread baking plants in Russia now is 11 percent. However, in some regions, for example in Rostov Oblast, it approaches to zero.

Speaking about the causes of increase in prices for flour, he said that to his opinion it was most probably due to grain sales abroad. Besides, despite large grain crop last year, the share of flour, which can be used in bread baking, decreases, which can also cause problems with supplies of the bakeries with raw material.

Russia produces 10 million tonnes of bread annually, using 7 million tonnes of flour.