March 25, 2023

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At what price is milk bought from the farmer and how much does it end up costing in stores. Daea calls for “economic solidarity”

The recent waves of price increases have also generated speculation. This is how, in a relatively short time, some food products ended up costing twice as much, although added together, production and utility costs do not end up being that high.

The Minister of Agriculture called for “economic solidarity” and asked stores to be “a little more subdued” when setting the shelf price.

Let’s take milk for example. A calculation made by the Ministry of Agriculture shows that, at this moment, the liter leaves the farmer’s gate with 2 lei and 60 money. It reaches processing plants, which prepare and package it for stores. He leaves here with 4 lei and in the end, on the shelf, it ends up costing 9, 10 lei.

Reporter: How many times does the price increase from your farmer until we see it on the shelf?

Mircea Dumitru, president of the Association of Romanian Balțata Breeders: Probably three times, minimum.

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Reporter: And on this chain, who has the biggest profit?

Mircea Dumitru: The processor, to a lesser extent, takes the seller the most. Therein lies the biggest problem.

The minister Petre Daea is of the same opinion, who urges the traders to be more frugal if they want to have something to put in the gallantry.

Petre Daea, Minister of Agriculture: “I would call for economic solidarity. And this economic solidarity should be seen in this price adjustment or better said in the price negotiations. They should be a little more toned down in this regard. We are not allowed to enter into price regulation because we cannot. It is a market economy. Those who don’t think that tomorrow they might not win anymore win more.”

Constantin Dumitriu has a company that distributes various food products to stores in the country. Most of them are produced by our own factory, so they go directly from the warehouse to the supermarkets, without passing through the hands of other intermediaries. Even so, he says, by the time it hits the shelf, the final price doubles or even triples.

Constantin Dumitriu, food producer and distributor: “A product that we have in our portfolio goes from 2.11 RON without VAT to the supermarket and we find it on the shelf at 4-4.10 RON, without VAT. That is a 100% addition. We’re talking about some chips. They are products that have, without exaggeration, over 200% commercial addition.”

The price ends up rising even more when the chain from producer to consumer is longer. That is, when processing factories or other intermediaries also come into play. And that’s because everyone takes care to keep as much profit as possible then.

On the other hand, the representatives of the big retailers say that the recent price increases are justified, and the increase in fuel and utility tariffs cannot be found in the final price.

George Bădescu, president of the Association of Large Commercial Networks: “I don’t know if we are talking about doubling. Each trading network has its own trading policy and has its own strategies. We are in a period of maximum instability and this causes many of the actors in the chain to take higher margins, risk margins.”

Even so, economists say food prices should not double.

Bogdan Belciu, financial consultant: “It is true that the price of energy has more than doubled in a relatively short period of time, but, again, depending on the specifics of the product, the weight of the final cost of the energy cost may be higher or smaller. But in no case do I think that there is any category of products for which a doubling of the price is justified. Not from one month to the next, but even over a longer period of time.”

On the other hand, according to experts, the increase in prices is also maintained by consumption. As long as these overvalued products have buyers, there is little chance that prices will drop further.

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