23 Aug 2023 13:52

Baby food production in Russia growing, prices for basic ingredients stable - ministry

MOSCOW. Aug 23 (Interfax) - Production of baby food in Russia is growing and prices for domestic basic ingredients for it and breakfast cereals are stable, the Agriculture Ministry said in a statement.

However, the ministry said it does not rule out the "risk of unfriendly actions" on the part of food giant Nestle, which has announced it is raising prices for baby food by 9% in September.

National daily Kommersant reported the company's plans to hike prices on Wednesday, citing a letter to retailers. Nestle declined to comment.

The ministry said that production of powdered milk and formula for infants increased by 16.7% to 26,200 tonnes in the first half of 2023. Production of processed fruit and vegetables for baby food rose 8.6% year-on-year to 2.255 billion standard jars; production of grain-based baby food increased by 19.9% to 8,500 tonnes; and production of water and beverages for children grew by 12.1% to 221 million liters.

"As for breakfast cereals, production of flakes in January-June totalled 146,500 tonnes, the same as last year's figure," the ministry said.

The ministry also recalled measures of state support provided to baby food producers, including subsidized short-term and investment financing, reimbursement of a portion of direct expenditures on building and modernizing facilities to produce baby formula and incentive subsidies.

"Furthermore, considering the current market situation, work on improving measures of state support in this segment is continuing. Specifically, the duration of subsidized investment financing for baby formula producers has been increased to 12 years, and provision has been made for possible extension of subsidized loans and the new area of providing subsidized investment loans of up to 12 years for producers of specialized therapeutic and enteral nutrition products, including for children," the ministry said.

The ministry also said that prices for domestic basic ingredients for baby food and breakfast cereals are stable. However, production costs for finished products may be affected by other factors, such as higher prices for logistics, energy resources, packaging and imported ingredients and rising wages.

"However, one cannot rule out the risk of unfriendly actions on the part of a company whose shareholders are representatives of unfriendly countries. The Agriculture Ministry of Russia will additionally clarify Nestle's position on the announced increase," the statement said.