Russian AgMin says bread prices could follow flour down

MOSCOW. Oct 11 (Interfax) - Bread prices in Russia could fall on the back of lower flour prices.

"We anticipate there will be a drop in prices for bread, based on the decrease in prices for the main ingredient," First Deputy Agriculture Minister Oksana Lut told reporters on the sidelines of a bread business forum.

Lut said flour producers had lowered their prices around 3%. "The price of bread here is still quite stable, that is, a strong decline in bread prices has not yet occurred - this will happen after a while, that is, a delayed effect," she said.

But flour is not a key factor in the cost of bread - the cost of other components such as logistics, electricity and packaging is growing. "Here, the basic ingredient is declining, but the rest of the ingredients continue to rise," Lut said.

Lut also said Russia was steadily producing in excess of 6 million tonnes of bread per year. "Production has been stable in recent years, we have produced just over 6 million tonnes of bread and flour products," she said.

The bread industry has enough flour - production of that is steady in Russia. "Although this year we produced significantly more flour, our flour has become an export potential. But, nevertheless, we ensure that there is enough flour to produce bread for domestic consumption," Lut said.

She said the forecast grain harvest in Russia this year was around 150 million tonnes, including 100 million tonnes of wheat. The rye harvest will be around 2.3 million tonnes. This is a "good result," this season's rye is "of very good quality," while producers had to import it last season, Lut said.

"This will certainly make it possible to meet all domestic consumption needs, both in terms of flour production and bread production. Most importantly, we understand and have already made a preliminary assessment of the quality of grain used for food purposes, and this grain will be of the necessary quality," she said.