The impact of state procurement interventions on domestic wheat prices in Russia

Purchasing interventions lead to the emergence of a more profitable sales channel for market participants, which determines the movement of market prices towards a new, higher value equal to the purchase price of goods in the intervention fund. The value of market prices increases to intervention prices in proportion to the share of public procurement in total market sales. The proposed model, based on the law of a single price, connects market prices, purchase prices, export and domestic sales volumes, as well as the volume of procurement interventions. Using the regression modeling method, the model was calibrated according to the value of elasticity of domestic sales and exports to domestic prices (–0,772946). The results of economic and statistical calculations based on the developed model allowed us to conclude about the impact of procurement interventions on wheat prices in the domestic market of the Russian Federation in August-­December 2022. During this period, the state purchased 3 million ton of wheat worth 46,4 billion rubles. This allowed for a price increase of up to 4–5% in some months, as well as a reduction in the coefficient of variation in prices in the Russian domestic wheat market from 18,23 to 16,74% in 2022. Taking into account the available wheat stocks of farmers’ prices for this crop could be increased by 6–7% in each of the months of the procurement session under consideration in the case of additional wheat purchases to the intervention fund.