OREANDA-NEWS. On April 14, 2009 The Expert Council on the Agricultural and Industrial Complex at the Federal Antimonopoly Service (FAS Russia) met, reported the press-centre of FAS Russia.

The meeting was attended by representatives of the largest Russian producers of agricultural-and-food and alimentary products, unions and associations, and experts on the agricultural and industrial Complex.

Opening the meeting, Andrey Tsuganov, Deputy Head of FAS Russia, said that "amid crisis of financial markets, FAS Russia pays special attention to the markets of socially important food products, and thereby it is especially important for us to analyze today's' situation on the sugar market".

Irina Kuznetsova, a Deputy Head of the Department of the Agricultural and Industrial Complex, gave a presentation "On the state of competition on the market of sugar production and the findings of the FAS Russia's research on the causes and reasonableness of the growth of sugar prices in January 2009".

Analysis of wholesale sales of sugar has demonstrated considerable increase of sugar prices by wholesalers, which should be inspected individually to check whether market participants are engaged in concerted actions.

The market of wholesale sales of sugar is moderately concentrated and competitive, and no economic entity has market dominant position.

Nevertheless, some economic entities took advantage of the difficult situation arisen on the market. In February 2009 some companies raised their prices for up to 36 Rubles per kg.

Increasing wholesale prices influence growth of retail prices for sugar and also pushes up the prices for the products in the allied industries, such as confectionery, bakery, production of juices, dairy products, etc.

FAS Russia will continue monitoring of sugar prices. Should any signs of antimonopoly violations be discovered, FAS Russia will undertake adequate measures of antimonopoly regulation.

At the same time, regional offices of FAS Russia check whether regional producers of sugar and wholesalers observe the antimonopoly legislation.

Members of the Expert Council took active part in the discussion and put forward several specific proposals, conducive to improving the situation on the market.

Andrey Bodin, the Chairman of the Board of the Union of Russian Sugar Producers (Soyuzrossakhar), gave a presentation on the current situation in the sugar industry, developing trends and the ways to prevent growing sugar prices.

Bodin underlined the following major factors of the growth of sugar prices:

- increased costs of import component in production of sugar beets,

- the net cost of beet sugar exceeds the selling prices of sugar in the autumn season,

- increased costs of servicing long-term currency credits for reconstruction of sugar plants,

- increased bank rates for loans in Rubles from 10-14% to 20-25%,

- recovery of expenses for the new harvest in 2009.

He also emphasized that "members of Soyuzrossakhar fully understand that sugar is a socially important product and although it makes only 2% of the food basket, many allied markets depend on sugar. We are prepared to actively cooperate with FAS Russia to stabilize the situation".

"The situation on the wholesale market shows that producers are not attempting to increase prices for their products. As for the trading companies - members of the same group of persons as production companies, we see rather considerable growth of prices", pointed out Andrey Tsuganov.

He mentioned that FAS Russia already obtained the first examples of colossal difference of retail sugar prices. "Monitoring of retail sugar prices demonstrated that in the same constituent territory of the Russian Federation the difference between the maximum and minimum prices can reach 20 Rubles. For instance, in the Lipetsk region the maximum retail price for sugar in the first ten days of March was 40 Rubles, while the minimum price was 22 Rubles per kg, in the Ulyaniovsk region the range was 58 Rubles and 26 Rubles accordingly", told Andrey Tsuganov.

Earlier FAS Russia analyzed sugar pricing in the production segment. The findings were published in February 2009.

Summing up the discussion of the Expert Council, Andrey Tsuganov added that FAS Russia would have yet to understand the factors and motivations behind the growing sugar prices by the wholesalers. "In May we plan to publish the findings of our research of wholesale and retail sugar prices".

Andrey Tsyganov also informed the Council on the expected changes to the antimonopoly legislation of the Russian Federation, included in the "second antimonopoly package" and on preparing the draft laws to the second reading by the State Duma of the Russian Federation.

Roman Bolotovsky, the Head of the Legal Department of "Vimm-Bill-Dann Food Products" OJSC, thanked the authors of the antimonopoly draft laws and drew attention of the senior officers of FAS Russia to some legal technicalities of the amendments that market participants thought necessary to take into account reviewing the draft laws.

In his turn, Andrey Tsyganov said that the documents were being actively reviewed for the second reading by the State Duma of the Russian Federation exactly for the purposed of their clarification and expanding the stated positions, and expressed his hope that the "second antimonopoly package" would be adopted in the near future.