Most of the processors and retailers HotNews spoke to about the commercial addition restrictions confirmed they would not hesitate to implement the emergency order passed on Friday, but the processors said they would sell at a loss for some products on the list. They are hoping that the government will not open a Pandora’s box and extend the 3-month deadline by adding other products with a limited allowance.

Even Competition Council officials say that adding a maximum of 20% to the cost of production, in the case of processors, respectively a maximum of 5% and 20% compared to the purchase price, in the case of distributors and traders, respectively, creates the risk of leveling operators at the maximum ceiling, which will lead to higher prices for end consumers.

This is considering that according to the National Institute of Statistics (INS), Romania had the cheapest food in the EU in 2022.

Pro Agro Federation: Such attempts have led to a burden on Romanian producers

In their opinion presented to the Ministry of Agricultural Policy, competition inspectors say that it would be appropriate to carry out an analysis after the application of a government measure to assess “the results and proportionality of the intended purpose of the measure, as well as to identify, if necessary, alternative solutions.”

The situation is more delicate in the case of eggs and pork, where producers and small farmers are operating on survival margins. The National Federation of Pro Agro reported that such attempts to lower prices have burdened Romanian producers, even though they should have been protected,” reads the open letter signed by Ionel Arion, president of Pro Agro.

According to the federation, from the component of the shelf price of agro-food products, the purchase price from the manufacturer is mostly lower than the production cost of products, it is sold at a loss due to the dominant position of retail trade, which is 85% of modern trade. “Under these conditions, given similar experiences, such as the decline in the price of milk, we express concern that the possible fall in prices of all food products will fall on the shoulders of producers and, of course, on the state budget, which will affect commercial farms that Any- which reduction or limitation of the commercial allowance will be transferred to the producer, or he is already selling at a loss,” the cited source emphasizes.

The limitation by means of the GEO project of the addition practiced by processors, distributors and food traders, respectively, can be justified by the existence of serious public interests, such as the protection of the final consumer, who is particularly vulnerable in the current economic context, competition. Council believes.

There is no industry-wide analysis to confirm that capping the premium is appropriate and will not lead to higher prices

At the same time, the view provided by the Government states that the determination of any regulated price is a difficult task to effectively balance the incentives of suppliers to operate and continue to produce in the market, while ensuring that profits are not excessive, but insufficient or.

Price regulation can have unintended negative consequences, such as distorting optimal levels of demand or supply, as well as facilitating agreements between businesses to equalize product prices.

Other risks:

• lack of similar provisions regarding the application of restrictions for imported products from legal entities not registered in Romania (for products processed outside the national territory);

• the method of implementing a cumulative commercial markup rate for the entire distribution chain, which is a maximum of 5%, may be difficult to implement if participants at this level do not know confidential information about the markup applied by their competitors; a possible result of this provision may be excessive transparency of the market at the level of the most sensitive characteristics, namely price, cost, commercial allowances, which may increase the negative impact on the market;

• lack of specific clarifications regarding the way or method of determining the cost of production, which directly affects the implementation of legislative measures. Setting a level of surcharge, even a maximum, which suppliers do not consider optimal, may cause difficulties in securing the internal market and have an effect contrary to the intended purpose.

• the absence of an industry-wide analysis to confirm that the maximum addition limit is appropriate and will not have the opposite effect of raising the prices of the relevant products or of other products in the same category due to an offsetting effect.

For some products, distribution chains are more complex and therefore involve more participants all the way to the end consumer. In this case, setting a single limit can lead to dramatic imbalances throughout the supply chain. The biggest risk with such an offer is that distributors and retailers will refuse to supply this product, citing the fact that it will cause them economic damage.

On Friday, the government adopted an emergency decree to limit commercial receipts for three months in order to reduce the prices of some products on the shelf. The measure will be applied along the chain from processors, distribution to supermarkets to lower prices for 14 agricultural and food products.

The list of agricultural and food products that should decrease in price in 3 months

• 1. Plain white bread weighing 300-500 g, without dishes
• 2. Fresh cow’s milk 1 liter, fat content 1.5%
• 3. Telemea cheese from bulk cow’s milk
• 4. Natural yogurt from cow’s milk 3.5% fat, maximum weight 200 g.
• 5. White wheat flour “000” 1 kg
• 6. Sieve 1 kg
• 7. M caliber chicken eggs 10 pcs.
• 8. Sunflower oil 1 liter
• 9. Fresh chicken meat
• 10. Fresh pork
• 11. Fresh vegetables wholesale
• 12. Fresh fruits wholesale
• 13. Fresh white potatoes in bulk
• 14. Cast white sugar 1 kg