Why is the Bread and Vodka So Cheap in the FSU?

[Nick_Moscow 2]

(From the "movingto the US" thread, since we've gotten WAY off topic)

All in all these are great points Gary, but before we get too nostalgic and rosy-eyed, I want to remind everyone that the reason

Their are many more bakeries making fresh bread and delicious pastries there, than here.

is because the Communist economy planners wanted it that way. I too love eating the fresh-baked bread dirt cheap over in Russia (if you buy fresh-baked organic/natural bread here it costs $3-$5 per loaf!), but I understand the unique economic model that allowed this bread to be baked and then sold so cheaply. That bread is so cheap and so readily available because the inrastructure was built with free/cheap labor under the USSR. I remind myself that one, it definitely wasn't efficient/effective/profitable to put a bread bakery in every town, and two, lots of people suffered through awful lives with no rewards for their hard work so that the bakeries could be in every town.

I imagine this same logic applies to many of the other cheap niceties you can get in the FSU.

What do you think? Why is the food so much fresher and why are certain items like bread, vodka, cheese, and shoe repair so much cheaper over in the former USSR?

[bigdog 376]

A miracle? Looks like bread,vodka and cheese are a basic food group.

[Ron-Tanya 23]

Having lived in Western Europe from the early 60's I know a little about the bread table. Yes, what you say is true about the FSU countries and controls on bread and the government pays at least half of the cost. In Western Europe the bread is also the GREATEST and it is public owned and operated at a profit. Most small towns have a bakery and the price is just a little higher than an FSU country. On the other hand the US has eaten the white sliced ####### for so long when a bakery makes a European type bread they make it sweet and charge an arm an leg. If you can find a bakery that makes good savory bread the European way it will cost you. Its new here or rather returning to our roots and they charge us more than they should, but as more people start buying it and leaving the white ####### on the shelf prices will come down(I hope)Every trip to Europe I bring back 3-4 kilo's of good bread and freeze it. Just take it out of the freezer let it thaw out then sprinkle a little water on it and but in a 350 oven for about 10-15 minutes and its like fresh baked.

[Gary and Alla 3,694]

(From the "movingto the US" thread, since we've gotten WAY off topic)

All in all these are great points Gary, but before we get too nostalgic and rosy-eyed, I want to remind everyone that the reason

is because the Communist economy planners wanted it that way. I too love eating the fresh-baked bread dirt cheap over in Russia (if you buy fresh-baked organic/natural bread here it costs $3-$5 per loaf!), but I understand the unique economic model that allowed this bread to be baked and then sold so cheaply. That bread is so cheap and so readily available because the inrastructure was built with free/cheap labor under the USSR. I remind myself that one, it definitely wasn't efficient/effective/profitable to put a bread bakery in every town, and two, lots of people suffered through awful lives with no rewards for their hard work so that the bakeries could be in every town.

I imagine this same logic applies to many of the other cheap niceties you can get in the FSU.

What do you think? Why is the food so much fresher and why are certain items like bread, vodka, cheese, and shoe repair so much cheaper over in the former USSR?

Government subsidies for the most part. They are not communist but still heavily socialist. The bread infrastructure has been replaced since 20 years ago, for the most part. The trolley cars are the same though.

You mistake my intent. It was not nostalgic about the FSU, it was to indicate that such businesses cannot exist in our current economy in the USA because the domestic regulations make the basis of the price too high to compete with cheap imports. It wasn't a comment about the FSU at all. I also specifically said it is NOT a bad thing that shoes and clothes are cheap.

Vodka and cigarettes are not heavily taxed in the FSU which is the largest reason Marlboro's cost 1/10th the amount in Ukraine as they do in Vermont, a fact that paid for my plane ticket for some years until I quit smoking. I believe the government of Ukraine prefers to keep some cheap "vices" available to appease the general population, particularly men. I do not drink but I know that Ukrainian vodka is very cheap because I always bring back a few bottles for gifts for stupid Americans that are impressed by Cyrillic lettering on the lable of $2 per liter vodka.

As to your comment, the infrastructure of everything was built using socialized labor, (my wife would not go so far as to say she was a slave) so why would the "cheapness" extend only to a few things? FSU countries heavily tax imports, so that imported clothing, shoes, electronics, etc. are unreasonably expensive. Domestic makers do not lose this opportunity entirely to raise their prices.

Labor in general is cheaper because their pay scales are lower and much of the services are produced by on the "black" market..."Black money" as it is known vs. "white money". This avoids taxes. But in fact the average income of that guy fixing shoes is probably under $1000 per month and that's much above the national average. The cashier at the local grocery store here is making at least $1,300 per month PLUS all the payroll taxes and worker's comp insurance PLUS benefits paid by the employer...add another 40% to their cost. Teachers in Ukraine, and we have two friends who are teachers...are making $200 per month PLUS what they may earn from doing private tutoring (black money) and whatever side work they may do. A teacher in the US works 35 weeks per year, gets incredible benefits can retire in 20 years and makes, minimum, $3000 per month...and gripes about it 24/7.

How such a well educated population, and they are well educated, and a country with such incredible natural resources (either Russia or Ukraine have rich natural resources) can maintain such an incredibly low level of per capita income is far beyond my comprehension. If someone can explain that, I would be grateful.

The opportunity I had to work there taught me so much and to this day it is my greatest adventure ever but it left me with a lot of bad feelings also. The men working on our project were paid $300 per month, CASH in either US dollars or Euros, they never knew which and they did not care. From this the company took $10 to provide them lunch IF they wanted to. Lunch was an open face sandwich on one slice of bread, a piece of meat and a piece of cheese and a bottle of water. They added a piece of fruit. Not a bad deal for $10 for 6 days a week. Many men also brought a jar with soup, usually borscht, from home. Some brought a jar of vodka, was was against the rules but we all know how rules are respected, right? They worked brutal jobs 6 days per week, 65 hours per week...$300 per month! We had much less motorized equipment than in the states. Stone was moved by hand...shovels and wheelbarrows, etc. I lived in relative luxury because I had a US salary, overseas bonus and living allowance which I wasted in its entirety on an impressive loft apartment downtown...it was worth it! I was warned never to let the workers see where I lived.

But those men worked very long and very hard for what they made to scratch out a basic life. Every night we had overtime work for the men, projects which needed to be done before the next morning, usually involving "materials handling" (that is what it is called here) and men would check the lists and sign up and work until 9 or 10 pm to make an extra $10 or $15. They could easily double their monthly pay doing this (it was paid by the job, not by the hour) I gained a HUGE respect for the dignity of these people. And I have no desire to live in Ukraine under such conditions. I can claim to have lived there and still own property and visit often enough and love it and love my friends there, but I do not wish to live the way they do.

So many times I hear young people here complaining and I want to say, "Come with me...work two years in construction in Ukraine, you sniveling brat! You will never complain again!"

My wife was educated and began her career teaching in the Soviet Union, she is not a little girl and could be the mother of most K-1 beneficiaries here (I am guessing at that, but probably not far off) Her mother was a young girl during the Great Patriotic War. I can respect what they have done.

I wasn't waxing nostalgic for the old days in the FSU.

[Gary and Alla 3,694]

Having lived in Western Europe from the early 60's I know a little about the bread table. Yes, what you say is true about the FSU countries and controls on bread and the government pays at least half of the cost. In Western Europe the bread is also the GREATEST and it is public owned and operated at a profit. Most small towns have a bakery and the price is just a little higher than an FSU country. On the other hand the US has eaten the white sliced ####### for so long when a bakery makes a European type bread they make it sweet and charge an arm an leg. If you can find a bakery that makes good savory bread the European way it will cost you. Its new here or rather returning to our roots and they charge us more than they should, but as more people start buying it and leaving the white ####### on the shelf prices will come down(I hope)Every trip to Europe I bring back 3-4 kilo's of good bread and freeze it. Just take it out of the freezer let it thaw out then sprinkle a little water on it and but in a 350 oven for about 10-15 minutes and its like fresh baked.

I think everyone can agree American bread is #######. There is even a thread entitled that here on VJ. Alla would object to your plan, since to her it is not good if it is not fresh! But that is a matter of personal taste.

There are THREE things she insists on and pays any expense for...

1. MILK, delivered in glass bottles fresh off the cow, not pasteurized, not homogenized. It is even better that she KNOWS the cows that make the milk.

2. EGGS, fresh from the farm. From chickens that "walk around on the ground and eat stuff chickens eat"

3. FRESH BREAD from a bakery. Fortunately one of our local grocery chains has a wonderful bakery and makes fresh bread twice a day, they will even make special bread to order. Alla usually finds one she likes off the shelves though. We also have Montreal close by and there are many bakeries their that offer fresh European style bread. She rarely buys more than one loaf at a time...she likes it fresh and usually starts eating it in the store. She does not trust me to buy bread.

All of them cost more than usual and I am told to, basically, "Suck it up, You want a Ukrainian wife...it costs you!"

[Neonred 3,562]

... and I am told to, basically, "Suck it up, You want a Ukrainian wife...it costs you!"

YES, and the same applies to a Russian wife.

[Gary and Alla 3,694]

YES, and the same applies to a Russian wife.

Hence...The RUB sub-forum.

[TBoneTX 45,288]

the same applies to a Russian wife.

The same applies to ANY wife, sigh man.

[Amy_and_Victor 159]

It's Victor writing. I spent my whole life until this year in Russia and will try to describe my point of view. First of all, cost of labor in Russia much lower, than in the US. If we will take as examples most common size of Russian cities (I'm not considering Moscow, SPb... or little Shitvilles), many entry-level positions there have wage $2-3 per hour (cashiers, stockers, bakery workers...). Here in my state minimum wage is $7.25 - it's twice or even triple more than in Russia, and sometimes people getting better wage even on basic positions. Now, about some specific products.

1) Bread. Sorry, but I disagree with point of USSR cheap infrastructure. In Russia it's a lot of pretty new commercial bakeries, which built their infrastructure from zero, they're not subsidized and 100% privatly owned. But they keep the same low prices for bread with "post-USSR" huge bakeries and have enough profit from it, selling a loaf of bread for under a $1.

First reason is, of course, labor price in Russia.

Second - market size. In the US many people almost don't use baked bread or buying disgusting frozen or shelf-stable bread (which is fairly cheap, but I would eat it only with starving threatening), so freshly baked bread market is much more narrow than in Russia, where almost every family can't imagine a day with no fresh (and only fresh) bread on the table - and often even few kinds, because different family members may like different bread. For many Russians table full of delicious meals with no bread is incomplete. People buying it all the time and it's so huge market that in Russia you'll see a lot of "bread-kiosks", where is only bread and bakery items sold, and these kiosks are profitable, because every day you see tons of big "bread-trucks" driving around the city delivering fresh bread to almost every store in the city, even to little pavillions. When it's so huge market with a lot of competitors, it makes them keep prices low.

Third - mark-ups. Ingredients for bread are cheap. I have a bread maker and baking my own bread by two reasons - I don't want to pay huge mark-ups and I want really freshly baked bread. I can tell that ingredients for bread, even bought by retail prices, starting from about 50 cents for a loaf of usual bread, and bakeries buying them by better prices than I do, so they pay even less. But loaf of bread, baked from these ingredients, will cost you $3-4 in the same retail's bakery section. I do not believe that it's a cost of baking it. I bet bakeries have much bigger mark-ups than they could have in the big market with a lot of competitors and where they would have to fight for customers.

2) Vodka. Even more simple - taxes. Cost of production of vodka is many times cheaper than actual retail price in the US or Russia. That's it. Taxes for alcohol in Russia lower (for tobacco too), but actually last years government raising it up regulary and planning to do it again and again, making vodka more and more expensive with every year. Next tax raising should be in the beginning of 2013, prices will change. Like about 5 years ago you could buy in Russia 500ml bottle of vodka for under $2. It was poor quality, but it wouldn't kill you. Now, as I remember (can't be sure) 500ml bottle will cost you at least $6 for the cheapest brands. It will be even more later, with time government planning to raise it up at least to $10 for 500 ml bottle what is pricey for Russian salaries (in the city I'm from, average yearly salary was barely $8000 per working adult - compare to US average incomes).

3) Shoe repair. First, many people lately don't like to repair shoes in Russia, they just buying new pair. I don't remember honestly when I repaired any of my shoes last time, probably when I was a college student. Of course, I would use a drop of rubber glue if I would see a tiny issue, but usually if my shoes went bad, I would just throw them to dumpster and would go to buy another pair. If you can buy a new pair for $50, who would pay $30 or $40 for repair of old shoes? Second, price labor - mentioned above. Third, this profession (shoe repair) is very low-level in Russia and paid very poorly. So yeah, they could try to charge $40 for shoe repair, but they wouldn't have any customers.

I'm not saying that my opinion is completely objective, but that's what I've learned from almost 30 years of life in Russia.

[Gary and Alla 3,694]

The same applies to ANY wife, sigh man.

But some are worth it.

[Gary and Alla 3,694]

It's Victor writing. I spent my whole life until this year in Russia and will try to describe my point of view. First of all, cost of labor in Russia much lower, than in the US. If we will take as examples most common size of Russian cities (I'm not considering Moscow, SPb... or little Shitvilles), many entry-level positions there have wage $2-3 per hour (cashiers, stockers, bakery workers...). Here in my state minimum wage is $7.25 - it's twice or even triple more than in Russia, and sometimes people getting better wage even on basic positions. Now, about some specific products.

1) Bread. Sorry, but I disagree with point of USSR cheap infrastructure. In Russia it's a lot of pretty new commercial bakeries, which built their infrastructure from zero, they're not subsidized and 100% privatly owned. But they keep the same low prices for bread with "post-USSR" huge bakeries and have enough profit from it, selling a loaf of bread for under a $1.

First reason is, of course, labor price in Russia.

Second - market size. In the US many people almost don't use baked bread or buying disgusting frozen or shelf-stable bread (which is fairly cheap, but I would eat it only with starving threatening), so freshly baked bread market is much more narrow than in Russia, where almost every family can't imagine a day with no fresh (and only fresh) bread on the table - and often even few kinds, because different family members may like different bread. For many Russians table full of delicious meals with no bread is incomplete. People buying it all the time and it's so huge market that in Russia you'll see a lot of "bread-kiosks", where is only bread and bakery items sold, and these kiosks are profitable, because every day you see tons of big "bread-trucks" driving around the city delivering fresh bread to almost every store in the city, even to little pavillions. When it's so huge market with a lot of competitors, it makes them keep prices low.

Third - mark-ups. Ingredients for bread are cheap. I have a bread maker and baking my own bread by two reasons - I don't want to pay huge mark-ups and I want really freshly baked bread. I can tell that ingredients for bread, even bought by retail prices, starting from about 50 cents for a loaf of usual bread, and bakeries buying them by better prices than I do, so they pay even less. But loaf of bread, baked from these ingredients, will cost you $3-4 in the same retail's bakery section. I do not believe that it's a cost of baking it. I bet bakeries have much bigger mark-ups than they could have in the big market with a lot of competitors and where they would have to fight for customers.

2) Vodka. Even more simple - taxes. Cost of production of vodka is many times cheaper than actual retail price in the US or Russia. That's it. Taxes for alcohol in Russia lower (for tobacco too), but actually last years government raising it up regulary and planning to do it again and again, making vodka more and more expensive with every year. Next tax raising should be in the beginning of 2013, prices will change. Like about 5 years ago you could buy in Russia 500ml bottle of vodka for under $2. It was poor quality, but it wouldn't kill you. Now, as I remember (can't be sure) 500ml bottle will cost you at least $6 for the cheapest brands. It will be even more later, with time government planning to raise it up at least to $10 for 500 ml bottle what is pricey for Russian salaries (in the city I'm from, average yearly salary was barely $8000 per working adult - compare to US average incomes).

3) Shoe repair. First, many people lately don't like to repair shoes in Russia, they just buying new pair. I don't remember honestly when I repaired any of my shoes last time, probably when I was a college student. Of course, I would use a drop of rubber glue if I would see a tiny issue, but usually if my shoes went bad, I would just throw them to dumpster and would go to buy another pair. If you can buy a new pair for $50, who would pay $30 or $40 for repair of old shoes? Second, price labor - mentioned above. Third, this profession (shoe repair) is very low-level in Russia and paid very poorly. So yeah, they could try to charge $40 for shoe repair, but they wouldn't have any customers.

I'm not saying that my opinion is completely objective, but that's what I've learned from almost 30 years of life in Russia.

It has been my experience also.

I would attach little to USSR infrastructure as little of it remains, HOWEVER one must consider that this former state infrastructure was purchased by politically connected people for just a tiny fraction of its worth, so their initial profit from business was high and allowed further upgrading later. So there is some risidual effect from a communist built economy though it becomes less so each year.

An average income of $8000 per year is still very low, less than half US minimum wage, but higher that it was and higher than in Ukraine. Our son, Sergey, was quite amazed to be paid $11 per HOUR for working at a grocery store stocking shelves at night here in Vermont.

Thanks Victor!