Ilie Sarbu: Food product prices likely to drop by as much as 30 pct, since October

Food product prices may register a reduction of up to 30 percent, starting Oct., following the coming into force of the Code of good practices for food industry, adopted by the Chamber of Deputies, Minister of Agriculture Ilie Sarbu told.

„The code was passed in the form agreed upon with producers’ organizations. It is going to be promulgated by Romania’s President, most likely next week, when it will effectively come into force. And I think that, starting Oct., we will see lower food prices in the big food store chains, of up to 30 percent, according to producers’ estimations”, Sarbu underlined.

He said that, based on this new law, the Romanian producer will be finally respected and encouraged, after a lot of years the big food store chains significantly rounded their profits.

According to the new law provisions, the big supermarket chains will be banned to impose suppliers the payment of some taxes not directly linked to the sales operation.
As well, suppliers cannot be asked to sell other stores products at an equal or higher price, so that no monopoly type understandings can be made by the big supermarket chains.

The law also says that the removal from the list of a product by the merchant can be made only with a two-month prior notification for supplier, an exemption being the case when the removal of a product is to supplier’s fault.
This law enactment is to eliminate a number of at least 13 hidden taxes perceived by hypermarkets from producers, conducive to an artificial increase of the sale prices.

The elaboration of the Code of good practices started a year and a half ago, when the employers’ unions and trade unions from the food industry accused the hypermarkets of boosting profits by an unjustified and artificial increase of the sale prices and use of hidden taxes.

The employers’ unions emphasized that the hypermarkets exercise an abuse of power by imposing some excessive contractual conditions and because of that producers in Romania have to exclusively work for them and their profit is extremely low.

According to employers’ unions, by using „hidden taxes” the sale prices are artificially pushed up and hypermarkets profitability reach levels between 30 up to 60 percent, with producers and consumers supporting significant losses.

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