"Kubanmoloko": the introduction of digital labeling for dairy products without an analysis of its feasibility is unacceptable
In December 2018 by the Decree of the Government of Russia there was approved the "Concept of creation and functioning of the system for commodity labeling with identification and traceability of circulation of goods in the Russian Federation" and on November 8, 2019 by Order of the Government of the Russian Federation No. 2647-R there were approved new initiatives for introduction of mandatory labelling by means of engraving on each piece a unique code, purchased from the operator of the labeling system – a private company. In fact, since June 1, 2020, a new tax is introduced for dairy products, which will be charged on each unit of goods not in favor of the state, but into the pocket of a private company.
At the same time, the system is introduced in the format of government orders, without assessing the financial and economic justification, expediency, regulatory impact, without dialogue with the business community.
During the last few years, this is the fourth traceability system in the food industry, designed to solve the same problems.
Conducting a comprehensive analysis of the potential costs of manufacturers to introduce the system, in November the Association "Kubanmoloko" held an Extraordinary General meeting of members of the Association, to which there was invited General Director of Soyuzmoloko Artem Belov, who announced the following data: in the first year, the cost of implementing the labeling system in the dairy industry will amount to 45 billion rubles, equipment and integration systems that need to be invested will cost 25 billion rubles, and about 20 billion rubles without VAT or 24 billion with VAT is the cost of trademarks that have to be bought in the first year. In addition, in the coming years we will pay about 20 billion rubles for the purchase of these trademarks and these costs will be annual. So, you understand, this is about 3-4 percent of the production cost of all dairy products.
In addition, there is another very important factor that is not taken into account – these are the losses that manufacturers will suffer due to the introduction of this system. Failure to scan the code at any stage, no matter in production, distribution, logistics, retail network will lead to the fact that this product will need to be withdrawn from circulation, it cannot be sold. Suppliers of labeling and scanning equipment are ready to guarantee that they will ensure that 98 percent of the codes are scanned. With the annual turnover of the industry of 1.5 trillion 2 percent is, by the way, 30 billion rubles. And what is 30 billion rubles? 30 billion rubles is about 90 percent of the gross profit of the industry, which it received in 2018. And where is the economic feasibility of implementing such a system?
The Association believes that the labeling system does not solve the problem of falsified products, because the mark on the label does not characterize the actual composition of the product. The labeling system can solve only one problem - the problem of falsification, and the share of falsified dairy products in Russia is 0.01-0.1%, which is approximately 300-400 million rubles. However, the costs of manufacturers and retailers to introduce and use the system are not comparable with the effects that we will get.
Labeling will not help to solve the key stated goals, and the risks of its introduction, which the Association sees, are great:
— Product quality may deteriorate. As a result of rising costs against the background of falling purchasing power due to lower incomes, what will business do? Most likely, they will reduce the cost of products.
— Prices will rise. There will be big problems for small and medium-sized enterprises, the probability of their bankruptcy is high.
— Decrease in revenues to regional budgets.
— Reducing the competitiveness of Russian exports, etc. Therefore, the introduction of mandatory labeling for the dairy industry is considered inappropriate, unreasonable and excessive.
The Association of dairy industry enterprises "Kubanmoloko" following the results of the Extraordinary General meeting of the Association members on 06.11.2019, in which the issue of introducing mandatory labeling by means of identification for dairy products was discussed, sent an appeal to the Head of the administration (Governor) of Krasnodar region Veniamin Kondratyev with a request to pay attention to the current situation, to support the position of the Association on the inexpediency of introducing a duplicate traceability system and to send in turn the appeal of the region to the Government of the Russian Federation with a proposal to analyze the feasibility of introducing a labeling system for dairy products, taking into account the work in the "Mercury" system.
The Association hopes for the support of the region in this matter, it also believes that the industry will be heard and fears will not be confirmed.
The DairyNews reminds: mandatory electronic labeling of dairy products will begin in the country on June 1, 2020.
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