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    Products are easier to deliver // Chains are advised not to penalize suppliers

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    The risks of difficulties with the supply of food products due to the partial mobilization announced in Russia may require easing working conditions for market participants. According to Kommersant, the Ministry of Industry and Trade has already recommended that chains introduce a moratorium on fines for manufacturers for missing deadlines or incomplete fulfillment of orders. Similar measures were taken after the outbreak of hostilities in Ukraine. Suppliers consider it necessary to fix the moratorium in an intersectoral agreement, and experts point to the risks of abuse of the measure.

    The Ministry of Industry and Trade recommended that retail chains introduce a moratorium on the application of penalties to suppliers for late or incomplete fulfillment of orders, two sources told Kommersant ” on the market. According to them, the recommendation was made on September 27 at a meeting with Deputy Head of the Ministry of Industry and Trade Viktor Yevtukhov.

    will hit the supply chain of large and small companies. X5 Group (Pyaterochka, Perekrestok, Karusel, Chizhik), Magnit, Lente, Auchan and Metro did not answer Kommersant‘s questions. The Association of Retail Companies declined to comment.

    Viktor Evtukhov told Kommersant that the Ministry of Industry and Trade is in constant interaction with the manufacturing and trading business and continues to draw the attention of chains and suppliers to the need for a balanced and painstaking approach to issues of compliance with the terms of supply contracts.

    After the outbreak of military operations of the Russian Federation in Ukraine, the Ministry of Industry and Trade has already recommended retail chains to introduce a moratorium on fines against manufacturers who, for objective reasons, cannot fulfill their obligations in March of this year. As the interlocutors of Kommersant among suppliers then explained, concessions are necessary to prevent empty shelves amid increased demand, logistical failures, rising costs, etc. (see Kommersant on March 5).

    The executive director of Rusprodsoyuz, Dmitry Vostrikov, says that manufacturers are already reporting an increase in the volume of orders from some retail chains by 10-20%, and the problems that arose after the pandemic and the military operation in Ukraine have not disappeared. Difficulties with logistics, the need to make a 100% prepayment for raw materials and ingredients, the long term for payment of delivered orders by chains led to a reduction in working capital for producers to a minimum, says Mr. Vostrikov.

    Head of the National Meat Association Sergey Yushin explains that during the pandemic, companies began to experience production and logistical disruptions, including due to the illness of employees, and chains noted an increased demand for products. At that time, the rejection of fines against suppliers made it possible not to aggravate the situation, but today there are similar risks, so a moratorium is necessary, he believes.

    In April, Rusprodsoyuz informed the Ministry of Industry and Trade that a number of networks did not fully accept the recommendations of the ministry or accepted them “nominally”, and increased fines themselves.

    As Mikhail notes Burmistrov, networks do not always penalize suppliers after clarification of the circumstances. In addition, he adds, it is necessary to stop the possible abuse of indulgences by manufacturers. Some unscrupulous players, the expert explains, used the moratorium, supplying goods in conditions of increased demand to points where profitability is higher.

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