The Agriculture and Food: Does Import Substitution Take Place?

Abstract

The situation in the agriculture and with food supplies can be characterized by a number of trends: • there is high food inflation in Russia for the fourth time in the past ten years; its level does not exceed so far the indices of 2007, 2008 and 2010; • reduction of households’ real income resulted in a decrease in demand on food; stable trend of reduction of retail trade physical volumes is observed; • the agriculture has reacted to changes in the market situation: output volumes of both export-orientated production (grain and oil-yielding crop) and import-substituted products (sugar beet instead of sugar-cane), as well as supplies of buckwheat, potatoes and vegetables have increased; However, from April 2015 growth rates of the agriculture happened to be below the 2014 level; • reduction of the volumes of the import of food in foreign currency did not result in reduction of its ruble equivalent as a whole. The above factor is indirect evidence of the fact that households keep spending a similar amount of funds as in the previous year on purchasing of a smaller quantity of import products. However, as regards dairy products, there is a reduction of the import both in volumes and in monetary (foreign currency and ruble) terms which situation could create conditions for import substitution. Below, the nuances of that process are considered.