Retail Chains Distort Market, Puff Up Food Prices, Consumer Watchdog Chair Says

Jerusalem, 2 March, 2023 (TPS) -- SOFIA, 02.03.2023 (BTA)
Retail chains, which control 50-60% of the food product market, Commission for Consumer Protection (CCP) Chairperson Stoil Alipiev told journalists here on Thursday.

In his words, the chains provide misleading or untrue information about the price and quantity of the merchandise. Also, products imported from Turkey, Greece, or other countries are passed over as Bulgarian, Alipiev added.

Economy and Industry Minister Nikola Stoyanov pointed out that he has been meeting with retailers and producers for months now to discuss food prices. “In my capacity as minister I have declared that I defend the business, but business must have ethics, which is why I will be uncompromising about unfair practices resulting in unfair prices for people. Each participant in the supply chain is shifting the blame to the rest, even though everybody realizes that there is a problem. We will find the information through official channels and we’ll see who’s right and who’s wrong,” Stoyanov said. “We have information about the prices of the goods abroad, which is why I assigned the commercial attaches to gather information because we cannot be entirely certain about the information received from members of the public,” the Minister said.

“We can see milk and butter retailing abroad at 20-30% lower prices than in Bulgaria,” Stoyanov said.

Agriculture Minister Yavor Gechev said that the food market will already be monitored on a constant basis. “Food prices have been rising over the last year, and this started at the same time as the war in Ukraine. The last couple of months have seen prices levelling off: in January, food price inflation reached 24.5%, down from 26.1% in December 2022,” Gechev said.

The Agriculture Ministry has detected a broad margin between producer prices and retail prices of eggs, butter, hard yellow cheese and white brined cheese. A liter of milk is priced at an average BGN 1.03 at producers but reaches up to BGN 4 in some shops, Gechev said.

Cucumber prices have soared, too, the Agriculture Ministry said. “This is an anomaly, but I expect the price to go down within 10 to 15 days,” Gechev said. “I have information that the situation is the same in England, where this vegetable is not available at all,” he added.

His Ministry is summing up food deliveries by retail chains in six channels. All show high markups, ranging from 48.8% to over 90%. The markups are due, among other things, to various fees charged from producers: for the promotion of a product range, turnover, discounts, etc. “This money is taken from customers but does not reach producers,” the Minister pointed out.

“Producers are terrified when asked to reveal the delivery prices because they are afraid of being dropped out of the distributor chains,” Gechev said. Thus, a 400 g pack of Kashkaval yellow cheese comes at a delivery price of BGN 8.04 but retails at BGN 15.99, the Minister said, declining to name the producer and the retail chain. In another case, a 400 g pack of white brined cheese from cow’s milk is delivered at a price of BGN 5.64, but the price tag on the chain’s shelf is BGN 10.79, which translates as a markup of 91%.

“All this is perfectly legal,” the Minister said. “The legislation is deficient, and we will take two quick measures to bring the sector into light: two ordinances will be adopted, drawn up by the ministries of agriculture and of the economy, to make public the whole supply chain. There will be registers of all traders and of the warehouses selling foods. When a product is first placed on the market, the trader will enter it in the register, and every successive trader will report the destination of the product and its price, Gechev explained.

Judging from tax prepayments, the profits of retail chains are expected to have increased their profits by 25%, a National Revenue Agency official said.