Minister of Agriculture Zdeněk Nekula (KDU-ČSL) spoke at a briefing after a meeting with representatives of the Agrarian Chamber, the Food Chamber and the Trade and Tourism Association (SOCR), February 27, 2023, Prague.
Prague – Minister of Agriculture Zdeněk Nekula (KDU-ČSL) filed a complaint with the Office for the Protection of Economic Competition (ÚOHS) due to the significant increase in the price of sugar in stores. He wants it to check its significant increase in price last fall. He turned to the Czech Trade Inspection because of the possible deception of the consumer due to the discount campaigns in the sale of sugar. He told journalists today after a meeting with representatives of the Agrarian Chamber of the Czech Republic, the Food Chamber of the Czech Republic and the Trade and Tourism Association.
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According to Nekula, the data of the Czech Statistical Office (ČSÚ) clearly show that the increase in trade mark-ups was extreme for some commodities and for some entities it does not correspond to the real increase in costs, even though he understands the increasing costs of businesses and the need to have a reasonable profit. “Some players in the food market are trying to exploit consumers and undercut prices in an attempt to maximize their profits,” he said.
According to Nekula, stores have abused the situation before Christmas, when people bake sweets and do not look so much at how much money they spend on sugar. “I believe that competition has not fully worked here,” he said. He had previously pointed out that the price of one kilogram of granulated sugar on store shelves, according to the CZSO, rose by 77 percent from September to December, while the producer price rose by 51 percent.
At today's meeting, the minister wanted traders, farmers and food producers to so-called “lay their cards on the table”, but according to him, not everyone took advantage of that. Nekula turned to the trade inspection due to the fact that the ministry noted a complaint where sugar krystal was offered in the store at a discount for 33 CZK and the price without the discount was 40 CZK. “This is not a discount, if according to the data of the CZSO it is a normal price. We perceive it as deceiving the consumer,” he added.
The Director of the Institute of Agricultural Economics and Information, Štěpán Kala, said after today's meeting with industry leaders that in the Czech Republic farmers kept the selling price of sugar beet at a stable level and increased prices by only 0.7 percent year-on-year.
According to him, the selling price of farmers is the basis for the entire production vertical. “The increase in consumer prices has been more pronounced than that of sugar mills since October last year,” he said. He noted that all food prices rose last year, but sugar prices more than doubled compared to January 2021. According to him, price increases already started in the fall of 2021. He added that the latest data from the CZSO show that the price of sugar fell by roughly five percent month-on-month in January.
Nekula said he wants to focus on other food prices in the coming weeks. He said that he definitely does not want to regulate food prices and pointed to negative experience from abroad.
Prouza: If the government wants to reduce food prices, it must propose a reduction in VAT
If the government wants to reduce food prices, it must propose a reduction in VAT and examine the market power of supply chains. After today's meeting at the Ministry of Agriculture, which was also attended by representatives of the Agrarian Chamber of the Czech Republic and the Food Chamber of the Czech Republic, the president of the Trade and Tourism Association of the Czech Republic, Tomáš Prouza, said this. According to him, the retail chains in the Czech Republic are not behind food price increases, none of them has a dominant position on the market, he added. about any prices, business strategies and the like. I think that (negotiation) was rather unnecessary,” said Prouza.
According to him, the government should propose a reduction in VAT on food and examine the competitiveness of supply chains. In the Czech Republic, there are one or two suppliers for a number of foods, who control a third of the market and dictate prices, he said. “When you don't have the opportunity to buy from five or six suppliers, the big suppliers naturally take advantage of that,” he added. According to Prouza, the state should also help smaller farmers and food producers. A large part of subsidies goes to unprofitable operations in the Czech Republic, and small entrepreneurs are forgotten, he said.
Prouza denied that food price hikes were caused by retail chains increasing their margins. According to him, there are 12 dominant chains in the Czech Republic, unlike other European countries, with the largest of them having a market share of around 15 percent. “If someone is making money from this situation, it's really not the retail chains. It's only good that the antimonopoly office will check it, so that we all finally have clear results,” said Prouza.
The President of the Agrarian Chamber, Jan Doležal, said that the traders' approach to the negotiations was completely unconstructive. “We came up with the idea that it's not a problem to get data on what costs primary producers have and what their purchase prices are. It's a much bigger problem for chains, they don't want to talk about it,” he said. According to him, farmers are dependent on the sale of their production in retail chains, while they can import food from abroad without any problems. He had previously denied that farmers were behind food price hikes. According to him, at the meeting with the minister, he talked about the fact that labor-intensive production, such as the production of dairy products, is not sufficiently paid by the retail chains.
Minister of Agriculture Zdeněk Nekula (KDU-ČSL) filed a to a significant increase in the price of sugar in shops, the Office for the Protection of Economic Competition. He wants it to check its significant increase in price last fall. He turned to the Czech Trade Inspection because of the possible deception of the consumer due to the discount campaigns in the sale of sugar. Nekula said he wants to focus on other food prices in the coming weeks. He said that he definitely does not want to regulate food prices and pointed to a negative experience from abroad.
