Government food price restrictions: mechanisms, results, alternatives

Abstract

On December 2020 the Government of the Russian Federation launched measures to limit the maximum level of prices for sugar and sunflower oil. They were established on the basis of agreements between the Government of the Russian Federation, major manufacturers and retail chains. Decisions were made on an emergency basis. This paper analyzes the legislative basis of the decisions made, the mechanisms of regulation and their consequences. The study revealed problems in setting and observing maximum prices: flaws in the legal framework for imposing price restrictions and agreements between the government and business entities, difficulties in choosing business entities and regions for signing agreements, insufficient opportunities for signatories to implement agreements, difficulties in monitoring the implementation of agreements and evaluating the effectiveness of the introduction of marginal prices. Based on the results of the study, it was concluded that the experiment with limiting the maximum level of wholesale and retail prices for socially significant food products did not yield positive results and alternative options are needed to reduce the volatility of food prices.