Alexey Babenko: the introduction of labeling of dairy products may lead to a halt in the production of a number of companies
Alexey Babenko, Deputy General Director for food production of JSC Russkoe moloko, told The DairyNews about a list of problems that the dairy market may suffer if product labeling is introduced: reduced competition between enterprises, an increase in the final cost of goods, as well as a halt in production of some companies. In addition, according to the expert, for the consumer, the consequences of introducing mandatory digital labeling in the Honest mark system are a decrease in the choice of goods and an increase in price.
‘The possible introduction of labelling in a natural way will affect the market of dairy products. First, the final cost of products will increase, and absolutely for all manufacturers. Therefore, there is no need to talk about increased competition: on the contrary, competition will decrease. After all, many enterprises operate with minimal profitability or on the verge of losses; they will not survive such an initiative and will be forced to stop their production. In short: for consumers, products will become more expensive, and the choice will be less,’ Alexey Babenko said.
JSC Russkoe moloko does not plan to participate in the pilot project of the CATD Honest mark for labeling dairy products. The company does not support labeling and considers it excessive, impractical, unreasonable, and extremely costly. The first reason to refuse to participate in this project was the amount of money that the company will have to spend on the purchase of additional equipment to meet the requirements for labeling – according to preliminary estimates of the company, this amount reaches about 200 million rubles. These calculations are derived without taking into account the fixed costs of emission, code printing, and technological losses. For a more in-depth understanding of the situation, it is necessary to understand that this equipment is produced not by Russian companies, but by foreign ones, therefore, the country's market turnover may suffer losses in the amount of billions of rubles.
Answering the question about the readiness of the dairy market to introduce product labeling, the expert noted: ‘The dairy industry is currently experiencing significant difficulties due to the increase in the cost of raw materials and a decrease in the cost of finished dairy products. Many components and ingredients used in the production of products are only imported, and have no Russian analogues. The same can be said about auxiliary materials, technological equipment and spare parts for it. Against the background of expensive loans and the growth of the exchange rate, there is generally no profitability of production for many,’ Babenko said. – In fact, import substitution in the dairy industry has not moved beyond the expansion of food production in the country. If domestic auxiliary materials are used in production, they are only the most basic ones. It is necessary at the state level to encourage the production of our own equipment and components, the production of our own auxiliary materials and high-quality components.’
The representative of the company stressed that it is important to realize that labeling not only does not solve the most important problem of the dairy market – falsification of the product composition, but also makes the situation worse: a manufacturer who sells low-quality products puts a fake "Honest mark" on the product packaging, thereby deceiving the consumer.
According to the representative of the agricultural holding Russkoe moloko, the traceability of the product route from the factory to the grocery shelf by the free state system Mercury more or less copes with the problem of falsification. ‘If we talk about solving the problem of counterfeit products, it will be a vapid conversation: there are no such a type of products in the dairy segment; this issue will be more relevant for the areas of alcoholic beverages and pharmaceuticals,’ said Alexey Babenko.
‘The only advantage of the additional labeling of the CATD in the dairy industry for state control bodies may be the constant enhanced control of commodity circulation in real time. In fact, it will perform a fiscal function and create additional prerequisites for the subsequent total digitalization of the economy.
Such an initiative against the background of a stagnant market can lead to increased problems in the industry, lower consumption of dairy products, the closure of many businesses and job losses. And to prevent this from happening, the state should develop standard domestic labeling systems and gradually implement them at enterprises at the expense of budget funds, if the budget allows it,’ Alexey Babenko said.
At the moment, the company Russkoe moloko has no doubts about the reliability of its technological equipment: the technology of printing and reading the code is not very difficult to master. The problem is the cost of project implementation and operation. Alexey Babenko stated: ‘neither the dairy industry nor the consumer of dairy products is ready for the waste of money for labeling products that will not bring evident positive effects.’
Earlier, The DairyNews reported that Danone refused to participate in the pilot project for labeling dairy products, as Marina Balabanova, Vice President of the company for communications in Russia and the CIS, said during the WorldFood Moscow 2020.
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