The CATD commented on the appeal of the Inter-industry Expert Council on labeling
In total, the letter was signed by 13 industry unions, including confectionery, dairy, non-alcoholic industries.
The authors ask the government to hold a meeting with the participation of the Ministry of industry and trade, the Ministry of agriculture, the Ministry of economic development, the Ministry of Finance, the FAS, the CATD and industry unions and associations "on the feasibility of introducing large-scale labeling of goods and assessing its impact on reducing the volume of illegal circulation of products".
We publish the comment of the CATD on the appeal unchanged:
The state system of digital labeling "Honest MARK" operates in accordance with the PPP agreement – in those industries for which the Government has defined mandatory labeling.
World experience shows that such systems are usually created in partnership with a private investor – this allows reducing the time of implementation by almost half. At the same time, the state retains full control and achieves its goals without costs from the budget (increasing the transparency of markets, automating control and Supervisory activities, protecting the interests of legal business, as well as people's lives and health). Private investments of the CATD will amount to more than 200 billion rubles within 15 years; the project will not pay off earlier than in 7 years.
Most of the signatories of the ICE letter are unions representing industries to which the labeling does not apply yet. Perhaps this is the reason for the fears of unions, inflated expectations for investment and price growth.
As the calculations show, for example, for the dairy industry, in 2005-2018 the growth of real prices (according to Euromonitor) ranged from 30 to 76% (for cheese + 76%, for milk + 49%). Just to remind, labeling for dairy products will be introduced only in 2020. If the share of illegal products in the industry as a result of labeling decreases by at least 3.8 percentage points, which is 17% of the total volume of illegal circulation (according to various sources – the Ministry of agriculture, the Rosselkhoznadzor, the Rospotrebnadzor, manufacturers' data – it is estimated at 7.5% - 22%), it will not have any impact on final prices.
At the same time, if the share of illegal products is reduced to zero, prices for consumers will be reduced by an average of 3.6% (without loss of profits by producers), and taking into account the average gross margin in the industry (19.8% according to SPARK for 2016-2018), the withdrawal of illegal products will increase the annual gross profit of producers by 46 billion rubles (the additional profit of the "white business" will fully cover the investment in the system and the labeling will bring additional benefits from the alignment of competitive conditions, the increase in the efficiency of logistics and supply management, new tools for interaction with consumers).
In the confectionery industry, the historical growth of real prices was also at a high level and according to Euromonitor and Rosstat amounted to 15% to 45% in 2005-2018. If the share of illegal products in the industry (according to various sources, it is estimated at 3%-25%) as a result of labeling will decrease by at least 4.7 percentage points, which in the limit is 19% of the total volume of illegal circulation, it will not have any impact on final prices. If the share of illegal products is reduced to zero, prices for consumers will be reduced by an average of 4.7% (without loss of profits by producers). This calculation does not take into account fiscal and qualitative effects, which can also have a positive effect on both the industry and all participants in the labeling system.
On the issue of labeling, the dairy industry is more united than ever - both industry unions - Soyuzmoloko and RSPMO (The Russian Union of dairy industry enterprises) oppose the introduction of labeling of finished dairy products. Earlier, CEO of Soyuzmoloko Artem Belov said that the industry association requires justification of labeling for milk.
