Novaya Gazeta, in a feature article, cites data from the joint study “Assessing the Impact of Institutional and Structural Changes on the Development of Russia’s Agricultural Sector”, conducted by Natalya Shagaida, Head of the Gaidar Institute’s Agrarian Department, and Vasily Uzun of the RANEPA Center for Agri-Food Policy.

In its feature, Novaya Gazeta further reports that the people and government officials strongly disagree with regard to consumer inflation assessments. Rosstat estimates consumer inflation to be at 6.5%. Meanwhile, ordinary people report to sociologists that prices have gone up 16.5%. At the same time, every fifth respondent estimates the rise in prices at 30%, or more, which is already hyperinflation.

The current “inflationary expectations”, which urge people to take out loans and buy up everything without looking at the price tags, and agree to any salary, and which also force the RF Central Bank to tighten monetary policy, is a derivative of food price growth.

And the people themselves made their choice in favor of food price growth, when 7 years ago they supported the “food embargo” and rejoiced at “import substitution”, fantasizing about cheap products supplied by domestic farmers. Now, the food market is divided between agricultural holding companies, which are protected from competition and can do whatever they want with the buyer.

Economists Natalya Shagaida and Vasily Uzun found that in 2016, the 100 agricultural holding companies that own the biggest assets (0.5% of the total number of companies on the market) accounted for 29% of all agricultural assets in this country, and 2.5% of agricultural holding companies owned more than a half of the said assets. Also in 2016, those same 0.5% (100 agricultural enterprises with biggest assets) received 57.9% of all investment loans issued by banks to the agricultural sector, and 1% of these, two thirds of all loans. The 95% of enterprises that were not included in the top 1000 owners of agricultural assets accounted for only 12.4% of the sector’s total lending volume.

“The uncontrolled monopolization of the market by large agricultural holding companies results in small and medium-sized enterprises being washed out; in its turn, this phenomenon creates structural constraints for development in rural areas, condemning them to stagnation, and ultimately slows down growth in the agro-industrial complex,” conclude the Gaidar Institute and RANEPA researchers.

For its part, the RF Central Bank has no influence on the policies and behavior of the owners of these agricultural holding companies, because it can only tighten its monetary and credit policies. As a result, people will have no money left for buying anything other than food. In this case, inflation, of course, will decline statistically. But this will not prevent real prices for food from climbing, and people will still be expecting their further growth.